[56 + ECONOMIC PRINCIPLES

capitalist, the mere owner of capital, from that of the undertaker
 of business management and risks. Later, we have
seen the growth of a great system of joint stock enterprise,
where the management is in the hands of salaried employees
in the main, the control resting with the shareholders, and
being exercised through their board of directors. The
services of the manager of the detailed organisation of
business are thus more markedly separated from responsible
ownership than when the owner, though not providing all
the capital in the business, was yet the responsible owner,
hiring the services of capital, and bearing the risks as well
as the responsibility. The replacement of the independent
owner of business enterprises by a salaried manager serves
to suggest a further analysis of profits, Formerly used to
include interest, the word came to designate the earnings of
management. This phrase readily suggests an analogy
between wages and the remuneration of the manager of a
business. The latter comes to be regarded as a specially
important member of the wage-earning classes, which have
long been held to include the salaried subordinates of the
manager-in-chief. As just pointed out, the later organisation
separates the remuneration of the manager from that of the
owners. The former takes the form of a regular salary.
The shareholders as entirely buy out the pecuniary interest
of their manager, in the outcome of his work, as he buys out
the pecuniary interest of the weekly wage-earner, in return
for a regularly recurring payment. Where the manager
receives a bonus proportioned to profits, this statement is not
entirely accurate, but the payment of a bonus in addition to
wages does not destroy the general nature of the wagespayment,

The distributive share known as profits, then, has, in
practice, had the remuneration of the services of management
cut out of it. What is left, profits proper, represents the
share of those who take the risks and assume thé responsibility
 of dictating the general lines of policy which the
manager is to carry out. It does not destroy the importance
of this separation if it be acknowledged that the manager's
advice, as to the lines of policy desirable to adopt, is