Turning the word upside down: How cantillon redefined the entrepreneur

Abstract

The word entrepreneur originally meant someone who is active, risky, and even violent. In the sixteenth and seventeenth centuries it was used to denote a contractor who built large structures and fortifications for the government or provided supplies for the military for a contracted price but largely uncertain future costs. In contrast, Cantillon (1755) defined the entrepreneur as someone buying goods and resources at current market prices to be sold in the future at uncertain prices. His definition was adopted by the leading French economists of the time, and as a result it eventually became the common usage of the term, as will be seen in a sample of French dictionaries over time. In this remarkable and largely unrecognized transfor-mation, Cantillon essentially turned the word upside down. Cantillon’s entrepreneur was self-regulating on the basis of profit and loss, and thus became the foundation on which he was able to construct theories and models of the market economy, which we know as economic theory. His definition is essentially that of Frank Knight and Ludwig von Mises, so it has important implications for the development of the Chicago and Austrian schools of economics.