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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Document type:: Monograph

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

Collection:: Economics Books

330 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK labor and capital, employed upon land, receive, after the pay- ment of rent, all that they produce at the margin of production, where the best of the free natural opportunities are still to be found. Further, the principle of diminishing returns serves to explain why the supra-marginal grades of land are scarce, and, therefore, no longer a free factor of production. The principle of diminishing returns, as applied by the Ricard- ians to land, therefore, reveals land as offering, to organized units of labor and capital, three general grades of natural opportuni- ties,—namely, supra-marginal, marginal, and infra-marginal. Only the supra-marginal opportunities are rent-opportunities. The product resulting, when organized units of labor and capital are applied to these, appears naturally divided into two parts. The owners of the organized units of labor and capital receive as much as these could produce, if applied to marginal opportunities, —the best free opportunities, still open to them,—and the landlord receives the differential (economic rent),—the economic product of the supra-marginal opportunities, which his land offers. The Ricardian law of rent, accordingly, marks off only the functional share of the landlord. The marginal product of organized units of labor and capital remained still to be “dis- entangled,” and the classical economists recognized no scientific principle in determining the functional shares of the capitalist, the laborer, and the entrepreneur. In this connection, let us consider the different reactions to the Ricardian law of rent, revealed in the thought of two American economists. Henry George says of it:? Authority here coincides with common sense, and the accepted dictum of the current political economy has the self-evident character of a geometric axiom. Mr. George accepts the law literally as applied to land, and regards the wealth produced in every community as ® divided into two parts by what may be called the rent line, which is fixed by the margin of cultivation, or the return which labor and capital could obtain from such natural opportunities as are free to them without the payment of rent. Accordingly, Mr. George, eliminating the enterpreneur on the ! Progress and Poverty, 1879, Book III, Chapter II. 2 Ibid., Book III, Chapter III.

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