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

334 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK the business unit is a fixed amount, and then introduce suc- cessively “units of labor,” the principle of diminishing produc- tivity would be seen in operation. The increment of product resulting from each succeeding unit in the procession would be a smaller one, and this would continue until the final unit of labor is placed. As Professor Clark says:* he law of final productivity applies to every mill, shop, or mine eparately considered. If its capital remains fixed in amount, units f labor produce less and less as they become more numerous. ere we get a glimpse of the varied quality of the eh or labor within the business unit, ranging all the way from the best, where the product is large, to the poorest, where the product s small, or conceivably vanishes altogether. ‘In the static state that we have assumed, competition works ithout let or hindrance,” * and accordingly the marginal oppor- unity for equal “units of labor” within the business unit becomes djusted. It varies with the relative number of units to be laced. Whatever its quality, it is here that labor’s product is ree from admixture with other elements. The entire product is pecifically labor’s product. This is what determines the rate of ages. At the margin all labor is tested. Here lies the best free pportunity still open to labor, and likewise the poorest oppor- unity that any labor is compelled to accept. Labor here receives ts entire product. t becomes at once evident, if our analysis is correct, that the arger product resulting from “units of labor” placed in the imited number of supra-marginal labor opportunities within i usiness unit, is not entirely labor’s contribution. It is clearly ivided into two parts by the marginal principle. Equal “units of labor” are equally productive. Labor’s product in all supra- arginal labor opportunities within the business unit is measured y what it can produce in a marginal opportunity. The differ- ntial is clearly to be attributed to the exceptional quality of the portunity in which the labor is placed. he logical conclusion follows. In view of the fact that all abor opportunities within the business unit are owned by the ntrepreneur the differential clearly belongs to him and con- titutes his functional share. It thus becomes an item in his nctional income,—namely economic profit. The principle of Essentials of Economic Theory, 1907, p. 14 bid., p. 143.

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