16 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
i. | m - 
duction upon distribution. While personal distribution is, of 
ourse, not identical with functional distribution, since one man, 
uch as a farmer, may receive an income from land, labor and 
apital, nevertheless for the great masses of men the economic 
plavses tend to conform to the categories. Thus the wage-earners 
eceive but a small fraction of their income from the interest on 
heir capital holdings, while the possessors of large fortunes derive 
ost of their income from returns on their property. A change 
in the ratios received by factors will then alter the relative income 
f individuals. 
If a factor then increases its share of the national income, the 
uestion is important as to whether it will spend this increased 
ercentage upon goods in which there is much labor but little 
capital or waiting, or for articles or services in which there is 
elatively little labor and much capital or waiting.* Thus, let us 
uppose that labor were to receive a larger proportion of the 
total product than before, if it were to expend its gains upon 
rticles in which an extraordinarily large amount of waiting had 
gone, then the demand for capital and consequently its marginal 
roductivity would go up by far more than would be the case 
were labor to buy articles and services in which only a small 
quantity of capital was embodied. Conversely, if it were to buy 
rticles in which much labor was embodied, it, as a class, would 
profit still further from the increased demand and increased 
marginal product which would result. Hence the more labor pur- 
chases personal services, the more laborers will profit from the 
existing national income, while the more capitalists buy products 
in which a large amount of capital is contained the more capital 
ill profit. 
The suggestion presents itself from this that since the recipients 
f large amounts of interest spend a much larger fraction of their 
income upon personal services in the form of servants, enter- 
tainers, etc., and buy goods upon which a great deal of hand 
ork has been lavished, that an increase in return to the 
apitalists would be partially offset by the increased demand for 
labor which would result. The rise in demand for chauffeurs, 
utlers, custom tailors and violinists would increase the wages 
or teamsters, bakers, cutters and general labor. 
1 am indebted to my friend and colleague, Jacob Viner, for calling m 
ttention to this set of influences. 
SEES