A FUNCTIONAL THEORY OF ECONOMIC PROFIT 333

economic factors involved are owned respectively by the laborer,
the capitalist, and the entrepreneur. Our immediate problem
therefore is to “disentangle” this joint product into three functional
 shares, namely wages, interest and profit.
It should be noted, before proceeding with our analysis, that
organization, which capital at first made a possibility, and finally
a necessity, appears to be the dominant factor. So essential has
organization become that labor and capital, if they are to have
a part in socialized production at all, must find places in organized
 relationship to each other in some business unit. While these
business units are organized and directed as going concerns by
labor, they are owned by entrepreneurs. This becomes the central
fact in our analysis; for it is the property right in the organization
 as such on which rests both the dominance of the entrepreneur
 in modern industry and his right to a distinctive functional
 share of the joint product.
The business unit may now be characterized as a complex of
socialized economic opportunities for portions of capital and for
portions of labor. These organization opportunities may be
designated, for lack of a better term, as “artificial,” in order to
distinguish them from natural opportunities (those connected
with land). These opportunities, whether for portions of labor
or for portions of capital, are evidently varied in quality.
Diversity in the quality of the organization opportunities in which
separate “units of labor” and separate “units of capital” must be
placed for effective team work is an attribute of the very nature
of organization. There are “many members, but one body.”
This diversity of opportunity may be brought into clearer perspective
 by application of the principle of diminishing productivity.

At this point in our analysis it should be noted, for the sake of
clearness, that the business unit, viewed as a complex of economic
opportunities, comprises in static industry two distinct, though
interrelated, groups of such opportunities. These may be designated
 respectively as the labor-group and the capital-group.
“Units of labor” introduced into the business unit would be placed
in opportunities for labor, and correspondingly “units of capital”
into those for capital.
To proceed now with our analysis, if we assume, as does Professor
 Clark, that the capital at the disposal of the organizer of