304 MODERN ECONOMICS 



amount is calculated by scientific formulae. But 

 originally they were as large as the landlord could 

 demand without fear of rebellion or of the death 

 of the tenant. Similar is the history of a manufac- 

 turer's profits. 1 They were originally so much of 

 the produce of a slave's industry as were not 

 required to keep him alive. They are now the 

 difference between the selling value of an article 

 and the price which is paid for it in the form of 

 wages to the workmen who make it. But they 

 no longer simply express the extorting power of 

 an employer. They include charges for skill 

 in superintendence, and for depreciation of 

 material, which are part of the necessary cost 

 of producing the output. They also include 

 interest charges on the capital cost of buildings 

 and machinery, and on the money advanced 

 in purchasing raw materials and in paying 

 wages. Those who believe in the possibility 

 of " collective ownership " will not admit that 

 these charges for interest are unavoidable, and 

 will view them as appropriating, and not as 

 producing wealth. But if, as may well be believed, 

 the community would be unable to raise the 

 necessary capital without borrowing at interest, 

 the capitalist may claim that his charges for 

 interest at the market rate are a necessary 

 condition for the effectiveness of labour, and are 

 part and parcel of the cost of production. No 

 such claim can, however, be made on behalf of 

 profits that are obtained by means of a ring, a 

 trust, or a monopoly. These simply represent 

 wealth that is appropriated from other members 

 of the community by the possession of a peculiar 

 artificial advantage. 



Trade enriches the world by circulating the 

 produce of industry. But it retains a very large 



1 Gross profits. 



