3.3 An enterprise is a market, organized by a natural or legal person: the entrepreneur.

1. The defining characteristic of the enterprise is to buy in order to sell.

An individual who, on occasion, buys in order to sell thereby creates an enterprise, however ephemeral it may be. Whether or not the tax authorities recognize it as such does not change anything. Non-profit associations which, in addition to their main activities, buy in order to resell operate an enterprise in this capacity, as does a parish that buys candles and resells them.

2. This defining characteristic makes the enterprise a market.

This does not mean that every market is an enterprise. The organization and policing of a market, whether local, national or international, often falls to the public authorities, which are not required to make it an object of trade. The labor market and the placement markets are institutions of this kind because of the legislative provisions that govern them.

3. In the market that every enterprise constitutes, economic exchanges are between itself, the enterprise, and several economic roles.

These roles include that of capital providers, that of workers hired by the enterprise, those of other suppliers, and that of customers. This makes any enterprise destined to last a hub of markets.

4. At the head of an enterprise, there is a person, natural or legal: the entrepreneur.

When the entrepreneur is the sole owner of the enterprise, it is customary to call the enterprise individual or in a personal name. But the enterprise is often a legal person, i.e. a commercial association with a corporate name (raison sociale), a domicile, and the capacity to sue and to acquire assets. In this case, the entrepreneur owns either nothing of the enterprise or only a greater or lesser share.

Entrepreneurs are individuals or ad hoc associations. Savers are individuals and other non-commercial associations, including families and foundations. Workers paid in wages in the full economic sense of the word (Chapter 9) are individuals, nothing but individuals.

5. The entrepreneur and the enterprise are not one.⁸⁷

The entrepreneur, individual or collective, chooses the goals of the enterprise and revises them at will. The enterprise, which is a thing, chooses none: it pursues those the entrepreneur assigns to it. These goals have a common property, the capability carried by the supplies it sells; production of this capability is the purpose of the enterprise.

A goal is a production outcome obtained within a given period; an objective is a production outcome that requires several periods and is reached through successive goals. Both bring the enterprise, step by step, closer to the expected capability.

The definition of the enterprise (3.1) fixes the genus of its purpose: to produce a capability sold through economic exchange. The entrepreneur chooses its species: which capability, for which customers.

The remunerations of wage-earners, of capital and credit placers, and of other suppliers are not purposes of the enterprise. They are the prices of its co-producers, owed in exchange, and the goals of those who receive them. Sufficient earnings are the condition of viability of this production and its test; they are not its purpose.

The whole is embedded in a social environment: every economic act of the enterprise is social or has a social effect (3.4), and the enterprise is subject to the law and to the discipline of sound economic exchange.

6. Company S is the legal owner of an apple orchard.

The decision on the mode of operation is the responsibility of the shareholders of S's capital. The decision to sell the apple orchard is also theirs. The status of a legal person does not confer any autonomy in relation to the holders of the shares in its capital, in principle.

In principle only? An enterprise manager is recruited. A wage is negotiated with him. Delegation of powers is given to him. The effective powers of the members may be reduced as a result. But if this reduction becomes effective, it is the result of abandonment and abuse. The members will have abdicated some of their powers. The head of the enterprise will have abused the powers delegated to him. The refusal of a discipline will persist: that of sound economic exchange, a concept that the objective theory of prices brings out, as we shall see further on.

7. The enterprise is just as conducive to the exercise of devotion as public administration, its elected personnel fully included, and as private associations whose principal object is not commercial.

Two currents of thought nonetheless oppose this parity of treatment, each in its own way.

• The first, stemming from Marx, attributes to the enterprise — by virtue of his theory of profit as the appropriation of surplus value produced by insufficiently remunerated labor⁸⁸ — a structural incapacity to contribute to the common good otherwise than by accident, since the accumulation of capital requires, by construction, the extraction of surplus labor.
• The second, stemming from libertarianism and methodological individualism⁸⁹, symmetrically denies to any authority other than the market — public administration foremost — the capacity to contribute usefully to the common good, for want of the profit-and-loss test and on account of the capture dynamics inherent to bureaucracies and interest groups⁹⁰.

These two currents, which from opposite directions exclude devotion a priori from one of the two spheres each denounces, proceed from one and the same economism: both subordinate the whole of social life to a single economic category — the relation of production for Marx, self-interested calculation for libertarians — and thereby exhibit what observation refutes: the propensity to devotion, like the propensity to pursue personal ends, is a property of the individuals who animate an institution, and holds regardless of that institution's legal status or economic sector.

Notes

87. See P. Fabra, Capital for Profit, Rowman & Littlefield, 1991, p. 215: capital comes to the entrepreneur rather than the entrepreneur to capital, so that the function of saving is almost wholly separate from the use of savings; and p. 218: the power of the owners of capital is to demand an account of the management, including the right to dismiss those in charge, for ownership is a right, not a function. On p. 91, Fabra holds entrepreneurial capacity to be a decisive factor of economic progress. ↩
88. Karl Marx, Capital, Volume I, Part III (on the production of surplus value) and Part V (on the rate and mass of surplus value). See also, within the present corpus, proposition 3.2's discussion of the maximum-profit doctrine, where the vocabulary of "class struggle" and "economic warfare" is already identified as belonging to the same interpretive tradition. ↩
89. See the definition of "methodological individualism" in Wikipedia (already cited at note 18 above). On the libertarian current proper: F. A. Hayek, The Road to Serfdom (1944) and The Fatal Conceit: The Errors of Socialism (1988); Ludwig von Mises, Bureaucracy (1944); Murray Rothbard, Man, Economy, and State (1962). ↩
90. James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy (1962) — the founding text of public choice theory on the self-interested behavior of bureaucrats, elected officials, and interest groups. ↩