THE IMAGE OF THE BUSINESSMAN IN UNDERDEVELOPED (POOR) COUNTRIES by P. T. Bauer 1. This set of notes is intended as a supplement to Professor Shenoy's paper. I did not see Professor Shenoy's paper before I prepared these notes, which is why they are a supplement or a complement to his paper rather than a direct comment on it. 2. The various attitudes, phenomena and influences which I shall discuss in these notes in the context of underdeveloped countries are present in the west also. Indeed, discussion of these matters in the context of underdeveloped countries may help to illuminate their presence and operation in advanced countries. Tocqueville noted that the Bourbon monarchy could best be studied in French Canada where its virtues and shortcomings could be seen in the clearest relief. 3. In public discussions in underdeveloped countries, even more than in the west, economic activity is often seen as a zero sum game, that is an activity in which the incomes of some persons and groups have been secured at the expense of others. This applies particularly to discussions of profits which are only too often regarded as incomes extracted from the rest of the community rather than as earned by the entrepreneur. Even fewer people in underdeveloped countries than in the west realise that the entrepreneur is primarily an intermediary between factors of production and ultimate users or consumers; that entrepreneurial incomes are residual payments reflecting the difference between what users pay for the product and the contractual rewards of factors of production. Quite generally, the profits are regarded as incomes extracted from consumers or workers or both. And the notion that profit incomes are extracted rather than earned tends to spill over to all above average incomes. 4. There are several distict reasons behind the idea that profits extracted rather than earned. They are inter-related and they reinforce each other. I shall refer to only some of these factors and influences. 5. In many underdeveloped countries, especially in Africa, the emergence or substantial of the money economy is only of recent origin. Accordingly its operation is even less well understood than in the west. The idea that above average incomes or special economic achievement are somehow abnormal or sinister is accordingly powerful. Moreover, until very recently, the fact that a large part of the flow of money payments represented tributes, taxes and proceeds of the slave rein- forces the idea that incomes represent exactions. 6. This last influence has in recent years been reinforced by the operation of another factor. The operation of extensive state control of economic activity in many underdeveloped countries has brought it about that a significant part of important categories of incomes represents the collection 1