Reply To: Capitalist vs. Entrepreneur


Economic theory defines the terms “entrepreneur” and “capitalist” in a functional way. The function of the entrepreneur in the division of labor is to organize production according to his foresight. If his foresight in anticipating consumer demands is superior to other entrepreneurs, he will earn profit. The function of the capitalist in the division of labor is to save and invest. His saving-investing earns interest.

Real persons can be both entrepreneurs and capitalists at the same time. Or they can be just capitalists. There is disagreement among Austrians as to whether or not persons can be just entrepreneurs.

If an entrepreneur borrows all the capital funding for his operation, then he will earn only profit and not interest. The capitalists he borrows from will earn interest and he will earn only profit.

Take a look at Peter Klein on the capitalist and the entrepreneur.