328 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
Professor Clark’s method of attaining a law of distribution is 
“not, therefore, first to eliminate from the earnings of society 
the element of ground rent, and then to try to find principles that 
will account for the remaining elements: it is to eliminate what 
is not rent,—namely, pure profit,—by reducing society to a static 
condition, and then, by a use of the rent law, to account for all 
that remains.” Thus, Professor Clark makes it evident that he 
recognizes, in static industry, only two productive factors,— 
namely, labor and capital,—and only two shares in distribution, 
—namely, wages and interest. The prices that prevail are 
represented as cost prices, and, to quote:? 
Cost prices are of course no-profit prices. They afford, in the case 
of each article, enough to pay wages for the labor and interest on the 
capital that are used in making it; but they give no net surplus to the 
entrepreneur, as such. 
The evidence, then, appears to be conclusive that profit, 
according to Professor Clark’s analysis, is not determined by 
his general principle of distribution,—the marginal productivity 
principle. The operation of that principle, as he seemingly 
views it, leaves the entrepreneur, as such, shareless, by ascribing 
the entire product of socialized industry, under static condi- 
tions, to labor and capital. Profit appears to owe its origin to 
dynamic changes and the slow functioning of competition. It 
seemingly constitutes a residuum which the entrepreneur finds 
in his possession only because the law of distribution, operating 
under dynamic conditions, does not ascribe it to labor and 
capital. Even then, it is “a vanishing sum,” as static standards 
tend to reéstablish themselves under the influence of competi- 
tion. As Professor Clark expresses it:?* 
Pure profit will always be found, at numerous points, though at no 
one of them will it prove permanent. If we continue to watch a 
particular industry, we shall see pure profit appearing as the result of 
n disturbing influence, and then slowly vanishing, as competition 
reasserts its control. 
[f, however, the factor which the entrepreneur, as such, dis- 
tinctively owns is essential to the socialized productive process, 
there would appear to be logical ground for the expectation, 
* The Distribution of Wealth, pp. 78-79. 
* Clark and Giddings, The Modern Distributive Process, 1888, pp. 45-46.