Entrepreneurial Income

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Entrepreneurial Income


the part of the average profit remaining to the functioning, that is, industrial or merchant, capitalist after payment of interest for a bank loan. Entrepreneurial income arises from the movement of loan capital. Attempting to extract the maximum profit, industrial capitalists resort to the use of borrowed capital in addition to their own. Having received a loan, the functioning capitalist purchases means of production and labor power. By exploiting hired workers, he extracts surplus value, which comes in the form of profit. This profit breaks down into entrepreneurial income, which is appropriated by the functioning capitalist-borrower, and interest, which goes to the loaning capitalist-creditor.

The division of profit into interest and entrepreneurial income camouflages capitalist exploitation and distorts the real nature of these parts of surplus value. This creates the appearance that interest does not result from production but from ownership of capital and that entrepreneurial income is not generated by the workers’ unpaid labor but by the functioning capitalist’s activities as supervisor and manager of an industrial or commercial enterprise. Acting as apologists for capitalism, bourgeois economists pass off appearance as reality and picture entrepreneurial income as a form of the capitalist’s wages.

There exists a bitter struggle between the functioning capitalists and the money capitalists over the division of profit. The former benefit from lower interest rates, and the latter, from higher rates. At the same time, both groups of capitalists oppose the working class, since both have a direct interest in exploitation of the workers. This opposition to the proletariat creates an underlying unity of capitalist class interests. Both money capitalists and functioning capitalists have an interest in increasing surplus value, that is, in intensifying the exploitation of hired labor. Thus, entrepreneurial income is a direct expression of the relations between functioning and money capitalists and, in the last analysis, of the basic production relation of bourgeois society: the relation between labor and capital.

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Numerical example of the entrepreneur's contribution Accounting profit $57,000 Foregone interest 1,000 Foregone rent 5,000 Foregone wages 22,000 Foregone entrepreneurial income 5,000 Total implicit costs $33,000 Economic profit $24,000
Households may earn not only wage income but also entrepreneurial income from ownership in a business or financial income from returns on investments such as stocks, bonds, and real estate.
Through PET collection and recovery, the operation will also help to create entrepreneurial income opportunities.
As in most of the literature, we find no associations between the moments of the entrepreneurial income distribution and the choice for entrepreneurship.
Whereas most prior studies tend to look at entrepreneurial income, this case focuses more on household wealth, which is defined as a stock of accumulated assets.
Whereas most prior studies tend to look at entrepreneurial income, this case focuses more on household wealth which is defined as a stock of accumulated assets.
Holding constant hours of leisure at LE, this distance represents entrepreneurial income beyond the minimum needed to keep her running her own business.
Burczak does provide a useful critique of Israel Kirzner's 'finders-keepers' defence of income property, pointing out that entrepreneurial income almost always involves having access to money, and profit depends on owning capital and hiring and so exploiting workers.
After a year of economic downturn, entrepreneurial income grew by 21%.
Components of disposable income Factor income = Wages and salaries + Entrepreneurial income + Income from property i) Wages and salaries (including fringe benefits and incentive stock options).

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