If risk and work are two ways profits can be earned, how are they related to each other?
Risk and work are at two ends of a spectrum of economically profitable activities. But risk and work are not contradictory, they must exist together.
To take economically profitable risks, do we need to do any work? If we consider an almost purely risky activity, such as wagering for stakes in a game of casino war (without side bets). This activity involves almost no work and almost all risk. It is a product supplied by a dealer (banker) and consumed by the player (for entertainment). But even a risky activity such as casino war requires some work. The dealer needs a deck of cards (a capital investment) and knowledge of the rules (some work) we would need to actually deal the game (work), etc. Any profitable activity, whether it be risk or work, must include ancillary tasks required to complete the activity.
Many people seem to be concerned with having a “job”, which is a low risk profitable activity. But all jobs carry some degree of risk. Working at McDonalds carries a very low level of credit risk, as McDonalds is a large well capitalized company with a long credit history. Its very likely that if you perform the tasks required for your job at McDonalds, you will be paid as promised. Credit risk is always present in doing work. More obvious employment risks involve physical injury, but credit risk is always present in any job.
How about the entrepreneur who is doing work by inventing a new product? They will need to research the production method, they may build a prototype, etc. There is no credit risk, so what other types of risks are present? Is invention the least risky working activity? Time is being devoted to the project, and this time could be used in other ways, so the inventor is risking their time.
Risk and work are both involved in any profitable activity.
