The Entrepreneur

3Classical Economics of the Entrepreneur

3.1. Richard Cantillon: an economic agent with uncertain income

To escape the straightjacket of the “economy of the Prince” [BOU 16], Richard Cantillon (1697–1735) looked to the entrepreneur, distinguishing between those with certain and uncertain incomes and placing the entrepreneur in the second category. The entrepreneur takes risks by firmly committing to a third party, with no guarantee of its solvency. He is generally not wealthy, but contributes to the progress of the economy through his projects, although society rejects him. Cantillon was an entrepreneur himself. If economics is the science of business, Cantillon was certainly also a great economist, because his risk-taking skills won him a considerable fortune. In “Essay on the Nature of Trade in General”, published in 1755, the entrepreneur gives tangible form to Adam Smith’s invisible hand. Cantillon gives the entrepreneur a new dimension by conceptualizing his behavior. Entrepreneurial action is firmly embedded in the market. It consists of identifying demand and directing production in order to satisfy them. The entrepreneur takes risks and scouts out potentially profitable activities. This role is reflected in production and trade. The original manufacturer entrepreneurs came from a wide range of professions: cobblers, carpenters, drapers, doctors, lawyers, even beggars and thieves.

Cantillon distinguishes between manufacturers and entrepreneurs. The former work for a ...