SPECIAL PROBLEMS OF WAGES 147

of the workmen, and part of that profit usually consists of
an agreed percentage of the sum the remainder of which
constitutes the premium on wages to the workmen.
If, instead of thus calculating the profit, on each task,
realisable by extra effort on the part of workmen, a bonus be
paid on wages out of the net annual profits of the employer,
whether individual or partnership or company, an interesting
variety of a supplement to ordinary wages is afforded. The
bonus may be assigned arbitrarily to individuals selected by
the employer, and its amount may be varied at his discretion.
Though it may afford some stimulus to diligence, if so
assigned, its effect is not so general as if all shared in it.
When the proportion of net profits to be given as bonus on
wages is definitely fixed, and the distribution among the
recipients takes place on a pre-arranged scale, the plan is
known by the name of profit-sharing. The usual basis of
distribution is to make the share of each workman proportionate
 to his year's earnings. Effectively, the wageearners
 are thus made sleeping partners in the business, and
in some cases they are assigned an active partnership
through the assignment of the bonus in shares in the
business, either wholly or partially. The possession of
shares, acquired in this way, is usually accompanied by a
tight to elect one or more representatives on the managing
board of the business. The enlisting of the interest of
employees, in the success of the business in which they are
employed, may evoke greater care and increased effort in
their work, and thus create an equivalent for the bonus
assigned. them.
In some cases, the acquisition of shares, as described
above, has resulted in the entire business becoming the
property of the employees, and, as such, managed by their
tepresentatives in their interest. But the ownership of
businesses by those employed in them has also arisen
independently, in pursuance of a plan to secure for workmen
the profits of the employer, to make workmen their own
employers. This form of industrial organisation is known
as productive co-operation, and must be distinguished from
the co-operation which consists of associations of consumers