en one industry and another, not only in
accordance with the real risk which is entailed, but with the degree
to which the supply of special knowledge, etc., is scarce or abundant.

This consideration goes a long way to explain the large fortunes which
enterprising business men are often able to amass. It also throws some
much-needed light upon the functions which such men discharge. They
perform to a large extent the work of management; they supply capital
on what may be a considerable scale; but it is the taking of business
risk which is perhaps their most characteristic function. It is the
union of these functions which distinguishes them as an essentially
different type from the salaried manager who has invested his savings
in rubber or in oil. In other languages there is a specific name for
the man who combines all these three functions; in French he is called
an "entrepreneur," in German an "Unternehmer." It is much to be
regretted that in English we have no clear corresponding word. The
word "capitalist" is not uncommonly employed to do duty in this
connection, but this is a source of much confusion. For the word is
also used, and more appropriately, to include all investors, whether
or not they are active business men.

Sec.6. _Risk-taking and Control_. But there is an allied confusion of
more importance. We commonly suppose it to be a leading feature of our
present "capitalist system" that the control of industry rests in the
hands of those who supply the capital. Nor, as a general statement, is
this untrue. But it conceals the essential point. Strictly speaking,
it is risk-taking with which control is associated. The mere lending
of money carries with it no title to control. Governments and
municipalities concede no such title to the subscribers to their
loans; nor does a company to its debenture holders. The shareholders'
ultimate control is based upon the fact that they bear the financial
risks of the concern. Nor is this a matter of mere legal form. It is
not uncommon for ordinary shares to carry with them a greater voting
power than the preference shares of a corresponding value. The
principle which such arrangements endeavor to express is clear:
control should rest with him who bears the risk. It is with this
principle rather than with a mulish insistence on the rights of
property, that advocates of "workers' control" and the like have got
to reckon. It is upon this ground that (as they may quite conce