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.