Economic essays

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Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Title:: A functional theory of economic profit / Charles A. Tuttle

Collection:: Economics Books

A FUNCTIONAL THEORY OF ECONOMIC PROFIT Charles A. Tuttle CurrenT explanations of profit as the income which the employer actually draws from business have been formulated without reference to any distinctive function which he performs. Their logical inconsistency in a theory of distribution which posits function as the basis of personal incomes from the product of socialized industry is obvious. The distinctive function among the varied relations which the employer sustains to business is the ownership of the business, viewed as an organized unit. This function the writer * denominates the function of the entrepreneur. It involves no labor, no capital-owning, and no ownership of land or other durable production goods. The personal income which attaches to this function is economic profit. Economic profit is therefore viewed as a distinctive income which attaches to a distinctive function. Unit organization, in which a portion of land, a portion of capital, and a portion of labor are placed in effective relationship to each other in a given business, is viewed as a distinctive factor of production, coordi- nate with land, capital and labor; and its ownership 1s viewed, accordingly, as a distinctive function coordinate with those of the landowner, the capitalist and the laborer. The product of socialized industry is therefore viewed as the joint result of four functions, and it is the problem of distribution to analyze this joint product into four functional shares which constitute the personal incomes of those who perform them. The immediate problem, therefore, which the writer of this paper sets himself, is to formulate a coordinate theory of economic profit as the functional share of the entrepreneur. The principle of diminishing returns which the classical econ- omists discovered in connection with land, enabled them to differentiate the product of land from that of the other factors. 1 «The Function of the Entrepreneur,” American Economic Review, Vol. XVII, pp. 13-25.

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