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

Structure type:: Chapter

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

Collection:: Economics Books

A FUNCTIONAL THEORY OF ECONOMIC PROFIT 331 ground of his performing no distinctive function, and merging capital with labor on the ground that capital is but a form of labor, views land and labor as the sole factors of production. He, therefore, regards the product of industry as divided by a natural law between the landlord and the laborer. To him the landlord, rather than the entrepreneur, appears as the beneficiary of material progress. The other American economist, to whom reference is made, is Professor John Bates Clark. In the preface of his great work, The Distribution of Wealth, he expressly says:* It was the claim advanced by Mr. Henry George, that wages are fixed by the product which a man can create by tilling rentless land, that first led me to seek a method by which the product of labor everywhere may be disentangled from the product of cooperating agents and separately identified. Our attention is called to the fact that Professor Clark, like Henry George, recognizes, in static industry, but two factors of production; but differs with him, first, in retaining the entre- preneur as residual claimant of the results of dynamic changes, which Mr. George allots to the landlord, and second, in merging land with capital, as one factor of production, and regarding labor as the other; while Mr. George, on the other hand, merges capital with labor, as one factor, and, as the other, emphasizes the dis- tinctive character of land. It is important, here, to note a further difference in the thought of these two economists. The Ricardian law of rent is regarded by Mr. George as of fundamental importance; while by Pro- fessor Clark it is viewed as “an obstacle to scientific progress,” retarding “the attainment of a true theory of distribution.” Mr. George's use of the principle of diminishing returns, although in accord with the classical employment of it, is regarded by Pro- fessor Clark as only a minor application of a general principle of diminishing productivity. He says of it:* The principle which has been made to govern the income derived from land actually governs those from capital and from labor. Interest as a whole is rent; and even wages as a whole are so. Both of these incomes are “differential gains,” and are gauged in amount by the Ricardian formula. * The Distribution of Wealth, 1889, Preface, p. viii. * “Distribution as Determined by a Law of Rent,” Quarterly Journal of Economics, Vol. V, p. 289.

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