Economic essays

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Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

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Title:: A functional theory of economic profit / Charles A. Tuttle

Collection:: Economics Books

328 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK Professor Clark’s method of attaining a law of distribution is “not, therefore, first to eliminate from the earnings of society the element of ground rent, and then to try to find principles that will account for the remaining elements: it is to eliminate what is not rent,—namely, pure profit,—by reducing society to a static condition, and then, by a use of the rent law, to account for all that remains.” Thus, Professor Clark makes it evident that he recognizes, in static industry, only two productive factors,— namely, labor and capital,—and only two shares in distribution, —namely, wages and interest. The prices that prevail are represented as cost prices, and, to quote:? Cost prices are of course no-profit prices. They afford, in the case of each article, enough to pay wages for the labor and interest on the capital that are used in making it; but they give no net surplus to the entrepreneur, as such. The evidence, then, appears to be conclusive that profit, according to Professor Clark’s analysis, is not determined by his general principle of distribution,—the marginal productivity principle. The operation of that principle, as he seemingly views it, leaves the entrepreneur, as such, shareless, by ascribing the entire product of socialized industry, under static condi- tions, to labor and capital. Profit appears to owe its origin to dynamic changes and the slow functioning of competition. It seemingly constitutes a residuum which the entrepreneur finds in his possession only because the law of distribution, operating under dynamic conditions, does not ascribe it to labor and capital. Even then, it is “a vanishing sum,” as static standards tend to reéstablish themselves under the influence of competi- tion. As Professor Clark expresses it:?* Pure profit will always be found, at numerous points, though at no one of them will it prove permanent. If we continue to watch a particular industry, we shall see pure profit appearing as the result of n disturbing influence, and then slowly vanishing, as competition reasserts its control. [f, however, the factor which the entrepreneur, as such, dis- tinctively owns is essential to the socialized productive process, there would appear to be logical ground for the expectation, * The Distribution of Wealth, pp. 78-79. * Clark and Giddings, The Modern Distributive Process, 1888, pp. 45-46.

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