320 PRINCIPLES OF RURAL ECONOMICS 



below that which the others would have had to carry if he had 

 not relieved them. 



But even if the farmer is not able to avoid losses more suc- 

 cessfully than the others whom he relieves of risk, he may still 

 secure an income through his function as a risk taker. The 

 owner of any factor of production will ordinarily accept as hire 

 something less than its average marginal product, on condition 

 that he be relieved of risk. The loss of a given sum out of one's 

 customary income is a matter of more concern than the gain of 

 an equal sum in addition to one's customary income. Almost 

 any one would therefore accept an assured income in preference 

 to an uncertain one, even though the chances were that the un- 

 certain one would average, in the long run, something more 

 than the assured one. Assured wages, interest, or rent, for ex- 

 ample, of $1000 a year, would be accepted by the average man 

 in preference to the uncertain earnings of business, even though 

 these uncertain earnings might be expected in the long run to 

 average as high as $i 100 a year. By taking advantage of this 

 tendency in bargaining for labor, land, and capital, the farmer 

 will therefore find himself in the possession of a surplus, pro- 

 vided he does not fail through sudden losses before he has 

 had time to profit by the average of the " long run." 



Let us suppose that a given fund of labor, land, and capital 

 can, on the average and in the long run, produce $1000 a year. 

 That is the amount which these factors would receive if they 

 worked together on the cooperative plan instead of being hired 

 by some farmer. But owing to crop failures, fluctuations of the 

 market, and other fortuitous circumstances, their product varies 

 from year to year, some years rising as high as $i 500, and again 

 falling as low as $500. Rather than take their chances with 

 these ups and downs, the laborers, landlords, and capitalists will 

 ordinarily be willing to accept a stipulated income of something 

 less than $1000, say $950, provided any one is able to make 



