Problems in American Democracy

income has to do with dividing the products of industry, or the money which represe

or no question as to whether or not individuals outside the family ought to be rewarded for having helped in the production of those commodities. If one member of the family made an entire pair of shoes, for example, he was clearly entitled to those shoes, at least so far as economic princip

e. Many commodities are still produced by individuals working independently, or by the joint efforts of the members of a family, but the vast majority of commodities are now produced by the joint efforts of numerous individuals who are not bound together by family ties. The production of a factory-made shoe, for example, involves large numbers of peo

. All these people help along the productive process, though in different ways and to a varying degree. Since all help, all are entitled to paymen

e of that product. Unfortunately, this fact is often overlooked. Many of the individuals who aid in production often become so intent upon securing their share, that they are over-ready to explain their contribution to the product, but loath to give due credit

s, let us continue to illustrate the nature of distribution by reference to th

plicity, that the entrepreneur has secured land from the land- owner, capital from the capitalist, and labor from the workmen. Protected in a legitimate enterprise by the government, he has set himself

mined. The entrepreneur must bow to economic law, and give these individuals what free competition in industr

se of the land. The entrepreneur, on the other hand, is able and willing to pay for the use of the land because upon it he expects to build a factory in which to manufacture shoes. He therefore pays the land-owner an amount of money called rent. The amount of ren

terest for the use of this money, since with the aid of the goods and services which it will buy, he can produce more shoes than would otherwise be possible. Not only can he afford to pay interest, but he is obliged to pay it, since otherwise he could not secure the required loan. Though some people tend carelessly to overlook t

nd at the same time few borrowers, then a given capitalist must be content to accept a relatively low rate of interest, lest his refusal cause the entrepreneur to close a bargain with a competing capital

laborers help in shoe manufacture, the employer can afford to pay them. Not only can he afford to pay them, but he must pay them. Otherwise the

ices of laborers are wanted badly, and if, at the same time, there is a scarcity of the desired type of labor, then wages will be high. I

maintenance of law and order without which the economical manufacture of shoes would be impossible. The share which goes to the government is determined by a unique method: the government does not try to secure as large a share of the product as

ure and then carried out the project. Without his efforts the land-owner, the capitalist, and the laborers would not have combined in this enterprise, with the result that there would have been fewer shoes in the community. Fewer shoes would probably mean more

count out his own share he must also pay taxes to the government, pay insurance on his plant, and set aside an amount sufficient to keep his buildings and machinery in repair. He cannot evade the payment of rent, interest, or wages on the plea that these payments will diminish his profits. He has contracted to pay the landlord, the capitalist, and the laborers, and he must fulfill that cont

factors. Where the supply of laborers is large, relatively to demand, the promised product of any one laborer is likely to be relatively small, and in this case the entrepreneur or employer will be unwilling or even unable to offer a particular laborer high wages. Under these circumstances the competition of the many laborers for the few jobs will accordingly bring about lower wages. Where, on the other hand, the supply of laborers is small, relatively to demand, the chances that a pa

NS ON T

the distribution o

relatively small importance pr

Revolution accentuate the importan

iculties which confront th

to the charge of injustice i

icance of the entrepr

the natur

e capitalist r

the laborer

overnment's share

e of profits, and how

RED R

ings in American De

f the fo

ary Economics, cha

e of the People of the Un

ry Economics, chapter

N THE REQUI

on-competing groups?

he difference in wages in differe

e efficiency of the laborer

nal theory of wages? (

d or decreased since 1

of risk to interest? (Th

erm "unearned increment"?

fits. (King,

creased since 1880

eristics of the business man

INVESTIGATI

ammer, a shoe, flour or canned goods. Make a list of the various individuals who are connected with the production of this commodity. By whom a

tenant willing to pay rent for this plot? Why is he able to pay rent? Do you believe that under the ex

es various groups of workmen. Classify the workmen on the basis of the amount of

Outline, either as the result of hearsay, or personal interview

ther recently failed, or which is not now in a thriving conditi

ortions. (Carver, Elementar

Wealth and Income of the People

n to income. (Thompson, Elemen

of capital. (Carver, Element

. (Taussig, Principles of Econo

of interest. (Bullock, Selected Rea

Carver, Elementary Econ

of labor. (Carver, Elementa

of wages. (Bullock, Selected Read

s. (Carver, Elementary E

Taussig, Principles of Economics,

ur. (Taussig, Principles of Economics, v

(Taussig, Principles of Economics,

distribution. (Carver, Element