PROFITS IN AGRICULTURE 871 



not a cause of price. Production at a lower cost creates profits; 

 competition forces prices down to lower cost and eliminates profits! 

 Profits can be maintained only by the creation of a continually newer 

 cost level lower than the new price. 



Profits are sometimes described as the wages of superintendence. 

 There are indeed certain occupations where the income partakes of 

 the nature of wages. Commissions of a broker, like the fees of a 

 professional man, are really wages, even though they are popularly 

 called profits. Wages, however, differ from profits in that wages are a 

 stipulated income and profits are a residual income. There is a normal 

 rate of wages, there is no normal rate of profits. Wages are a part of 

 cost, profits a surplus over cost. The entrepreneur may think that 

 he deserves a return for his services, but whether he secures one 

 depends on his competitors. There is always a certain level below 

 which wages cannot fall, because no work would otherwise be done; 

 but the very continuance of competitive profits depends on the abler 

 producer cutting down cost to the point where the marginal producer 

 earns no profits. The reduction of some wages to zero implies star- 

 vation of the laborer and the crippling of the productive force of the 

 community; the reduction of some profits to zero means the elimina- 

 tion of the inefficient and the continuance of progress. Above all, 

 profits differ from wages in that profits are the direct result of price 

 fluctuations. The question thus arises as to the dependence of profits 

 upon chance. 



Aleatory or chance profits exist in varying degrees. Some are 

 essentially unique or sporadic. If I find a pocket-book on the street 

 or receive a bequest, the income is wholly aleatory. The line between 

 aleatory and ordinary profits is, however, not so easy to draw. In 

 the first place, we have a great field of speculative profits, to be 

 discussed in a moment. Secondly, there is an element of luck in all 

 business. The oscillations of demand and supply are frequently 

 influenced by accident. A flood, an invention, a war, a new whim in 

 fashion, a chance occurrence of -any kind, may affect the individual 

 or the group, the producer or the consumer, and by influencing either 

 cost or price, modify business profits. In one sense all price fluctua- 

 tions are accidental. The aleatory element is inseparable from profits, 

 since profits are derived from fluctuations; but the ultimate cause 

 of persistent profits is the ability of the individual to take advantage 

 of the fluctuation and in the long run this ability plays into the 

 hands of society at large. 



