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Social Prosperity

surplus, manufacturer, utility, capital, expenses, total and return

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SOCIAL PROSPERITY The prosperity of society is measured by the surplus utility which it can create in a given time. It is important that it be understood just what is meant by surplus as the term is here used. It is the designation of all that part of utility which remains after the costs of pro ducers have been made good. It is, perhaps, easiest to see that the manufacturer, or the farmer, or the miner has left, after meeting all his expenses of production, a surplus product. Assuming that the manufacturer himself en gages actively in the production as manager of the industry and as capitalist, it may be true that he does not have a surplus on every incre ment of capital which he invests, or on every hour during which he labors. If we admit that the fatigue of the labor which extends far into the night is so great that the return only enables the manufacturer to regain his former 112 position, there is at least for the earlier hours an equal or a greater return, and there is there fore a surplus on the labor of those hours, in creasing in amount toward the earlier hours of the day. His capital may be arranged likewise in a series of increments, each after the first bringing in a smaller return than the increment preceding Then even if we admit that there is just an even return on the last in crement invested, there is still an increasing surplus on the preceding increments as we approach the investment which is most pro ductive.

The total surplus on manufactured goods does not appear, however, in the profits of the manufacturer. This total surplus is made up in part of items which enter into the manufact urer's expenses. If he furnishes a part of the capital and is part owner of the land used by the industry, he is at one and the same time manufacturer, capitalist, laborer, and landlord, and in each capacity adds something to the total surplus. But those parts of the surplus 1 Clark, " Distribution as Determined by a Law of Rent," in Quarterly journal of Economics for January, 1892. 1 contributed by the capital, labor, and land of other persons appear on the manufacturer's accounts as items of expense. It is precisely

the same to the manufacturer, so far as the particular transaction is concerned, whether the wages paid out by him are needed by the laborer to reimburse actual labor costs, or whether they are partly surplus enjoyed by the laborer. Thus, the surplus incomes enjoyed by the capitalist who loans to the manufacturer, by the landlord who rents his land, by the la borer who works for wages, are all properly counted as expenses of manufacture, but they are not costs to society. Before we can deter mine the social cost of a given quantity of commodities, we must trace back through the complex processes of production the actual productive exertions of the different classes of producers, disregarding the expenses of him whom we call the manufacturer, because those expenses are made up of many items which may or may not be costs ; but, on the other hand, counting his costs, and those of all other producers.

We thus ascertain one of the two elements necessary to a correct estimate of national pros perity. Over against this cost we are to place the other element, the total utility of the com modities produced. The difference between these is the social surplus, or the real measure of prosperity. It is a mistake to suppose that this social surplus can be increased only by methods which increase both costs and utilities, or that there is an invariable relation between the increase of utilities and the increase of costs. At any given time, in a given stage of progress, there may be such a relation, but it is modified by many causes which are continu ously in action. Every such cause that modi fies the relation favorably, enabling greater utility to be produced at the same cost, or the same utility at a less cost, increases the social surplus. Among such causes may be named the discoveries which place the natural forces more completely at the disposal of society, the accumulated results of past civilization, in herited capital and knowledge, and inherited industrial The fact that there has been such a change in the relation of cost to I Patten, Dynamic Economics, p.

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