Hello… I believe that I understand the difference, but I would like to refine some of the details…. I had a couple of questions concerning capitalists in contrast with the entrepreneur.
-What is the difference between the capitalist and the entrepreneur? Sometimes they are used interchangeably… Can one be both a capitalist and an entrepreneur?
-An entrepreneur borrows capital because he expects to receive profits… If the entrepreneur doesn’t own any capital, but borrows it all, then does the pure rate of interest only go to the capitalists that he borrows from? Or does interest go to the entrepreneur as well?
(I have come to think that only the capitalists will receive the interest, and the entrepreneur will receive the profits…)
-And, by borrowing capital, does the economist primarily mean borrowing money? Or is the actual capital goods lent out?
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.