function of the first degree.”43 This is certainly a remarkable discovery; for the relation between
product and factors is to be considered to hold good irrespectively of the play of the market: “an
analytical and synthetical law of composition and resolution of industrial factors and products which
would hold equally in Robinson Crusoe's island, in an American religious commune, in an Indian
village ruled by custom, and in the competitive centres of the typical modern industries.”44 There is
a magnificence in this generalization which recaps the youth of philosophy. Justice is a perfect cube,
said the ancient sage; and rational conduct is a homogeneous function, adds the modern savant. A
theory which points to conclusions so paradoxical ought surely to be enunciated with caution.
To sum up this criticism, as Distribution is a species of Exchange, it seems undesirable to
employ a phrase so foreign to the general theory of Exchange as the dictum that one of the parties
to an exchange normally gains nothing. Innocently used at first, such paradoxes are calculated to lead
to confusion and misrepresentation.
A similar remark applies to another form of the gainless entrepreneur, involved in Walker's
analogy between profits and agricultural rent.45 Even on the simpler and provisional view which is
confined to short periods and commercial competition, this form of expression has no advantage over
the terminology proper to the general theory of Exchange. When we consider long periods and
industrial competition, Walker's theory has the graver disadvantage of not distinguishing between
rent and quasi-rent. It seems to be generally admitted that Walker's masterly portrait of the industrial
captain was not improved by his representation of profits as rent.46
Having now considered the party that takes factors of production in return for products, or
the proceeds thereof, let us look at the other side of the counter,—the triangular counter across which
we may imagine the three factors of land and labour and capital to be exchanged, if we place in the
interior of the triangle an entrepreneur of Walker's type, our second species, dealing with three
parties in quick succession, and in some sense simultaneously.47
At the height of abstraction from which it is here attempted to survey the economic world,
what appears the most salient feature in the transactions respecting land is the circumstance that the
43. As pointed out by Professor in his review of Mr. Wicksteed's essay Economic Journal, Vol. IV.
p. 311. In Mr. Wicksteed's notation the function f must be of the general form
Ï
_ ,where ψ is an arbitrary function.
√
See Forsyth, Differential Equations, Art. 189, or Boole, Differential Equations, chap. xiv, Art. 6.
44. Loc. cit., p. 42.
45. As argued by the present writer in his Address to the British Association for the Advancement
of Science, 1889, written before the publication of Professor Marshall’s weightier judgment in the
Principal of Economics.
46. Compare Mr. J. H. Curran's temperate criticism in his study on Walker (in Conrad's
A bhandlungen ).
47. In the sense in which equations are called simultaneous.