Are Ownership Rent and Pure Profit Separate Returns to the Entrepreneur?

The Quarterly Journal of Austrian Economics 21, No. 3 (2018)

16 Pages Posted: 13 Mar 2019

See all articles by Joseph T. Salerno

Joseph T. Salerno

Ludwig von Mises Institute; Auburn University ; Pace University - Lubin School of Business

Date Written: February 21, 2019

Abstract

Murray Rothbard developed the concept of decision-making rent as a return to a kind of unhirable labor performed by the entrepreneur in his role as owner and ultimate decision-maker of the firm. Rothbard conceived owner’s rent as separate from profit and loss and the decision-making function as concerned with productive organization and technique, which is distinct from the function of forecasting uncertain future market conditions. Vlad Topan (2012) disputes Rothbard’s position and contends that ownership rent does not exist because decision-making ability is meaningless in the absence of uncertainty. In this paper, I argue that Topan’s critique rests on fundamental misconceptions about the nature of entrepreneurship in Austrian economics.




Keywords: decision-making ability, decision-making rents, ownership function, entrepreneurship, firm

JEL Classification: D20, D21, L20, L21, L26

Suggested Citation

Salerno, Joseph T., Are Ownership Rent and Pure Profit Separate Returns to the Entrepreneur? (February 21, 2019). The Quarterly Journal of Austrian Economics 21, No. 3 (2018), Available at SSRN: https://ssrn.com/abstract=3339536

Joseph T. Salerno (Contact Author)

Ludwig von Mises Institute ( email )

Auburn, AL
United States
3343212113 (Phone)

HOME PAGE: http://www.mises.org

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States

Pace University - Lubin School of Business ( email )

1 Pace Plaza
New York, NY 10038-1502
United States

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