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

336 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK Attention is here called to the exception. The ownership of durable “artificial” production goods is not viewed by the writer * as an essential element in the function of the entrepreneur. The usance as distinguished from the ownership of such goods is alone necessary, and this can be secured like that of land by lease. The differential that the marginal productivity principle allots to the exceptional opportunities for capital which “artificial” instruments offer, belongs economically to the owner of the instruments. The differential in this case as clearly constitutes the functional income of the owner as does the differential of land constitute the functional income of the owner of land. The ownership of all durable production goods, of which land is typical, is regarded by the writer as a distinctive economic fune- fion, and the functional income attaching to it is economic rent. By way of summary, it appears from our analysis that eco- nomic profit exists in static industry as the distinctive functional income of the entrepreneur. It seemingly comprises two distinct differential elements, namely, first, the product of the supra- marginal (exceptional) opportunities inherent in the nature of the business unit for the employment of equal “units of labor,” and second, the product of supra-marginal (exceptional) opportunities inherent in the nature of the business unit for the productive use of equal “units of capital.” The business unit is here char- acterized as a complex of opportunities of varied quality for equal “units of labor” and for equal “units of capital.” To the entrepreneur as owner of the business unit these differential ele- ments belong. They contain no admixture of wages or of interest, and therefore constitute the entrepreneur’s functional share. It is the prize which lures men in static industry to assume the func- tion of business ownership. The conclusion is reached that the law of marginal productivity, which was first applied by the Ricardians to separate as a differential the rent of land (here viewed as typical of the rent of all durable production goods) serves likewise to determine, directly, economic wages and eco- nomic interest, and at the same time to separately identify, as a clear differential, economic profit as the functional income of the entrepreneur. ! “The Function of the Entrepreneur,” American Economic Review. Vol. XVII, pp. 17-18.

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