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

A FUNCTIONAL THEORY OF ECONOMIC PROFIT 327 however, economic rent,—the product of supra-marginal instru- ments,—and economic interest,—the marginal product of capital, —are but different names for the same functional share. It is economic rent, if viewed from the standpoint of “capital goods,” and economic interest, if viewed from the standpoint of capital and conceived as a percentage upon a value-fund expressed in terms of money. To the writer this assumption of Professor Clark is not in keeping with the distinctions made in practical life, and befogs, at once, both his conception of the capitalist function and that of the entrepreneur, and seemingly renders it impossible to treat economic profit as a distinct functional share, determined by the general principle of marginal productivity. To be more specific, natural economic law operates, in Pro- fessor Clark’s view, to cause * “the whole annual gains of society to distribute themselves into three great sums—general wages, general interest and aggregate profits,” which are, respectively, the earnings of labor, of capital and the entrepreneur’s function. He proposes to prove the general thesis, that, “where natural laws have their way, the share of income that attaches to any produc- tive function 1s gauged by the actual product of it. In other words, free competition tends to give to labor what labor creates, to capitalists what capital creates, and to entrepreneurs what the coordinating function creates.” * Further, according to Professor Clark:® Wages and interest are incomes that may be treated as static in their nature: they would exist if society were to remain in an unprogressive state, with its forces in a certain balanced condition that excludes external changes. Disturb this equilibrium of forces, make structural changes in society, create a condition in which labor and capital begin to move from one point in the general system to another, and you furnish opportunities for the creating of another income that is dis- tinctively dynamic. We shall call this pure profit.* It is a product of unbalanced forces, and exists, under natural law, only while society is changing. Eliminate those internal movements of the industrial forces that we have indicated, and you destroy it. The remaining product of social industry will then resolve itself into wages and interest. ' The Distribution of Wealth, p. 2. 2 1bid., p. 3. * “Distribution as Determined by a Law of Rent,” Quarterly Journal »f Economics, Vol. V, p. 289. ' The italics are the writer's.

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