Economic essays

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Monograph

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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Document type:: Monograph

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

Collection:: Economics Books

24 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK ation varies. He will not knowingly pay more than that, because o do so would involve a loss. Of course the owners of the factors f production will not knowingly take less than their marginal products, ecause that is what they are really worth, and that is what they an get if they are persistent and skillful in bargaining. But it is ever known precisely what their marginal products are at any given ime. Under stable conditions of industry, experience would deter- ine that point with a fair degree of precision, and employers would id against one another for any factor which could be had for less han its marginal product until they would bring up its price. . . . ut conditions in the business world are never quite stable, and under nstable conditions it is more difficult to tell in advance what the arginal product of any factor will be. In general the business man s more careful to avoid losing that which he already has than to gain mething in addition. Consequently he will be pretty sure to keep n the safe side when making an offer to the laborer, the landlord, or he capitalist. Moreover, he is in a better position to know what their actors are approximately worth than the other men are. The result is that the factors of production are more frequently employed at a rice slightly under than over their marginal productivity. . . . In the ast analysis, the profits of the superior bargaining of business men, a class, come out of the wages, rent, or interest, of the labor, land, r capital which they hire. What one business man gains off another dds nothing to the general share of profits; but in so far as he out- argains the laborer, the landlord, or the capitalist, he does add some- hing to the general share of the business men’s profits by taking mething from the shares of the other factors. he conclusion to which Professor Carver finally comes is “that rofits include only what is left after the other shares are paid”; hat “in a very concrete sense the profits of a given business man re what he has left after paying all his expenses and allowing imself wages for his own labor; such wages as he could command n the market if he were to offer to work for someone else, besides nterest on his own capital and rent on his own land; such interest nd rent as these factors would bring in the market.” his somewhat extended quotation serves to substantiate the riter’s contention that Professor Carver’s explanation of profit s not in harmony with his general principle of distribution. conomic distribution, it should be observed, is theoretical; in it argaining and contract have no place. It calls for a theory of economic profit which shall coordinate with those of the other shares. Contract distribution, on the other hand, is practical, and all the shares are practically, as Professor Carver rightly observes, “the immediate result of bargaining.” Economic distri-

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