that does not fall within the scope of pure economic law.

_How "Natural" Prices exclude Entrepreneur's Profits._--The old and
correct view is that the tendency of competition is to make things
sell for enough to cover all costs, as we have defined them, and no
more. Under a different phraseology this is what Ricardo and others
have rightly claimed. They were unconsciously explaining what would
happen in a static state, for if society were actually in this state,
the goods that come out of the factory would be worth just enough to
reimburse the owner for all the outlays that can be called costs. If
they sell for more than this, there is to be had from the business an
income that costs nothing. It is a net profit above all claims based
on personal labor or on the aid furnished by capital, and it furnishes
an incentive for enlarging the business, and labor and capital are
therefore drawn into it. _Entrepreneurs_ bring them and for a time
make a profit by this means; but as their presence increases the
output of goods that are here made, it brings down the price till
there is no inducement to move any more labor and capital in this
direction.

_The Significance of a Natural Adjustment of Different
Industries._--The "natural" state of general industry is that in which
each particular branch of it is in the no-profit state. It is as
though laborers and capitalists in a shoe factory took all the shoes
that it turns out, sold them in a market, paid for the raw material
out of the proceeds, and kept the remainder, dividing it between
themselves in proportions which corresponded with the amounts they had
severally contributed toward the making of this product; and as though
the laborers in cotton mills and iron foundries received the goods
there made and dealt with them in a like manner. It is as though in
every branch of business the whole product were turned over in kind to
the furnishers of labor and capital.

_The Entrepreneur a Passive Functionary under Static
Conditions._--Purely passive is the function of the _entrepreneur_
under static conditions. In so far as any effect on his income is
concerned he might as well reside in a foreign land as in the one
where his business is located, provided always that the management
were unaffected. When the same man is both _entrepreneur_ and manager,
the absence of the first of these functionaries would mean the absence
also of the second, and that would cause trouble; but the pu