146 TWELFTH REPORT, 



the sub-giouj). The first two processes are coutrolled by the market 

 price of the produce : the last, or functional distribution, as we would 

 say, is governed by productivity, labor tending to get what it sepa- 

 rately produces and capital likewise.^ 



In order to reduce all units to homogeneity Clark would fund all the 

 factors of production. Laud and capital are reduced to an abstract 

 mobile capital fund ("social capital"), and labor to j^roductivity units 

 ("social labor"). Then the specific product of a unit of any factor may 

 be segregated, he maintains, by turning to the margin. In the case of 

 labor this may be found widespread in a zone of indifference as to em- 

 ploying more men. In all industries there is an intensive margin. 



It is a chief service of Clark to have developed and defined (not origin- 

 ated) the idea of a fund of value abstract and not lost in the capital 

 goods through which it finds expression at any given time. This is 

 similar to the business usage. It is a conception which helps to an under- 

 standing of the mobility of capital under competitive conditions. The 

 criticism is that Clark carries the idea too far, applying it to factors 

 which are not mobile in fact. 



Though for the most part a "natural" tendency to equalize returns 

 in dift'erent industries is posited as the force assuring the productivity 

 correlation, it is made clear that it is the free competition among em- 

 ployers that is assumed in the static state which insures the full value 

 of his product to the laborer. The pleasure and pain calculus is the 

 mainspring of the Avhol^ machine. 



Both wages and interest can be "translated" into the form of rents 

 on concrete producer's goods^ — Clark denies peculiar significance to land 

 rents — and these rents are elements in determining values. 



Professor Clark's theories have been attacked on all sides.- Relatively 

 few are in agreement as to tlie organic character of society, and few 

 believe that such "heroic abstraction" as characterizes his theory is 

 fruitful. His "static state" is after all quite similar to one in which the 

 "natural" conditions thought of by the classical economists exist. Hob- 

 son and others have attacked the validity of the "dosing" method of 

 isolating the specific product of a given factor. Others deny that land 

 can be treated as a mobile fund, holding that in this it difi'ers from 

 capital. Perhaps the basic weakness of Clark's analysis is similar to 

 that found in the thought of the Austrian school, namely, the fact that 

 it attempts to apply to a complex of individuals, society, a marginal- 

 utility analysis which can hold only for the individual. 



We must not think, either, that in some measure to justify a static 

 tendency as to functional distribution is to justify the present social 

 order. For even though units of labor and capital each received a re- 

 turn projiortional to its productivity there would still remain the per- 

 sonal question, does each laborer receive what lie produces? Or, again, 

 the mere fact that the land owner receives Avhat his land produces does 

 not justify private property in land. 



In his more recent Essentials of Economic Throrif (1907) Clark in 

 no way departs from his old stand. The distinction between static and 

 dynamic is ever before us and though the book is written parti}' to ful- 



^Chapter II. 



=See e. g.. Carver's and Hobson's discussion in the Journal of Political Economy. 1904-0.5 ; 

 Carver's discussion in Quarterly Journal of Economics, August, 1891 : Davenport's Value 

 and Distribution, Chapter XXII. 



