In this section, the final one of the chapter, the author begins by noting that the preceding discussion of an entrepreneur's expenditures assumed these expenditures to include both those expenses going toward running the business, as well as spending on consumption goods.
The author explains that it was a "theoretical convenience" to suppose the entire financial aspect of the business to involve transfers into or out of the entrepreneur's private account, although in practice this supposition is unrealistic. For a private firm, the distinction between the firm's account and the individual's account may be somewhat artificial; for a joint-stock company, however, the situation is different.
There is a real line of division; the financial side of the firm's operations has an existence of its own quite separate from the private accounts of the shareholders—a separation maintained by the legal principle of limited liability.The analysis of the present chapter would apply "perfectly well" to a firm's financial account being treated as a sort of private account, but there is a remaining difficulty when it comes to joint-stock companies, namely their decisions about payment of dividends. The author concludes this section (and the chapter) by explaining the difficulty as follows:
No clear principle is left to determine on what scale dividends should be paid—that is to say, how much should be paid out in dividends in the current period and how much should be 'ploughed back into the business'. Nor does there seem to be any theoretical device by which this arbitrariness can be removed; it is a ... real peculiarity of the joint-stock company. ... [T]he only implication for the general dynamic theory ... is that we must be prepared sometimes to treat dividend policy as an independent variable.
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