95] ECONOMIC WORKINGS OF THE SYSTEMS 95 



the fundamental and persistent economic forces; while 

 the latter is concerned with forces of a secondary and 

 fluctuating nature — that is, with the forces of change. 

 In order to appreciate the static forces an ideal condition 

 is assumed in which the economic motive works without 

 let or hindrance and in which the forces of change are 

 absent — there are no changes in the wants of consumers, 

 nor in the amounts of labor and capital used, nor in the 

 methods of employing the two factors. Such a combin- 

 ation of circumstances works so to adjust the labor and 

 capital that all units of each are equally productive and 

 every unit is located where it finds its highest productive 

 efficiency. 



The competition which brings about this adjustment 

 in response to the economic motive so operates as to 

 attribute to each factor that part of the product for 

 which it is specifically responsible. The laborer gets as 

 wages the specific product of his labor, while the cap- 

 italist gets as interest the specific product of his capital. 

 If one person be at the same time both laborer and cap- 

 italist his income is both wages and interest, each deter- 

 mined in the manner just stated. These two categories, 

 wages and interest, exhaust the whole of the static in- 

 come. The above description precludes the existence of 

 profits in the static realm. Profits are always the result 

 of changes and can exist, therefore, only in a dynamic 

 society. 



The static state posits the perfect mobility of labor 

 and capital but presents no movements of these from one 

 group to another for the very good reason that there 

 exist no inducements which could lead to such move- 

 ments — any change would decrease rather than increase 

 the product per unit as well as the total product. Al- 

 though the assumptions of the static state present a case 



