24 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
ation varies. He will not knowingly pay more than that, because 
o do so would involve a loss. Of course the owners of the factors 
f production will not knowingly take less than their marginal products, 
ecause that is what they are really worth, and that is what they 
an get if they are persistent and skillful in bargaining. But it is 
ever known precisely what their marginal products are at any given 
ime. Under stable conditions of industry, experience would deter- 
ine that point with a fair degree of precision, and employers would 
id against one another for any factor which could be had for less 
han its marginal product until they would bring up its price. . . . 
ut conditions in the business world are never quite stable, and under 
nstable conditions it is more difficult to tell in advance what the 
arginal product of any factor will be. In general the business man 
s more careful to avoid losing that which he already has than to gain 
mething in addition. Consequently he will be pretty sure to keep 
n the safe side when making an offer to the laborer, the landlord, or 
he capitalist. Moreover, he is in a better position to know what their 
actors are approximately worth than the other men are. The result 
is that the factors of production are more frequently employed at a 
rice slightly under than over their marginal productivity. . . . In the 
ast analysis, the profits of the superior bargaining of business men, 
a class, come out of the wages, rent, or interest, of the labor, land, 
r capital which they hire. What one business man gains off another 
dds nothing to the general share of profits; but in so far as he out- 
argains the laborer, the landlord, or the capitalist, he does add some- 
hing to the general share of the business men’s profits by taking 
mething from the shares of the other factors. 
he conclusion to which Professor Carver finally comes is “that 
rofits include only what is left after the other shares are paid”; 
hat “in a very concrete sense the profits of a given business man 
re what he has left after paying all his expenses and allowing 
imself wages for his own labor; such wages as he could command 
n the market if he were to offer to work for someone else, besides 
nterest on his own capital and rent on his own land; such interest 
nd rent as these factors would bring in the market.” 
his somewhat extended quotation serves to substantiate the 
riter’s contention that Professor Carver’s explanation of profit 
s not in harmony with his general principle of distribution. 
conomic distribution, it should be observed, is theoretical; in it 
argaining and contract have no place. It calls for a theory of 
economic profit which shall coordinate with those of the other 
shares. Contract distribution, on the other hand, is practical, 
and all the shares are practically, as Professor Carver rightly 
observes, “the immediate result of bargaining.” Economic distri-