Profits of Capital and Business Power

In the concluding chapters of Book IV we made some study of the various forms of business management, and the faculties required for them; and we saw how the supply of business power in command of capital may be regarded as consisting of three elements, the supply of capital, the supply of the business power to manage it, and the supply of the organization by which the two are brought together and made effective for production. In the last chapter we were concerned mainly with interest, the earnings of the first of these elements. In the earlier part of this chapter we shall be occupied with the earnings of the second and third taken together, which we have called gross earnings of management; and after-wards we shall pass to the relation in which this stands to the earnings of the second taken by itself which we have called net earnings of management.1 We have to inquire more closely into the nature of the services which are rendered to society by those who undertake and manage business enterprises, and the rewards of their work; and we shall find that the causes by which these are governed are less arbitrary, and present closer analogies to those which govern other kinds of earnings, than is commonly supposed.