the vested interests and the common man-µÚ12½Ú
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has¡¡come¡¡in¡¡evidence¡¡in¡¡this¡¡later¡¡time¡¡is¡¡traceable¡¡to¡¡the¡¡fact¡¡
that¡¡other¡¡things¡¡have¡¡not¡¡remained¡¡the¡¡same¡£¡¡The¡¡odious¡¡outcome¡¡
has¡¡been¡¡made¡¡by¡¡disturbing¡¡causes£»¡¡not¡¡by¡¡these¡¡enlightened¡¡
principles¡¡of¡¡honest¡¡living¡£¡¡Security¡¡and¡¡unlimited¡¡discretion¡¡in¡¡
the¡¡rights¡¡of¡¡ownership¡¡were¡¡once¡¡rightly¡¡made¡¡much¡¡of¡¡as¡¡a¡¡
simple¡¡and¡¡obvious¡¡safeguard¡¡of¡¡self¡direction¡¡and¡¡self¡help¡¡for¡¡
the¡¡common¡¡man£»¡¡whereas£»¡¡in¡¡the¡¡event£»¡¡under¡¡a¡¡new¡¡order¡¡of¡¡
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of¡¡assured¡¡defeat¡¡and¡¡vexation¡¡for¡¡the¡¡common¡¡man¡£¡¡
¡¡
Chapter¡¡4¡¡
¡¡
Free¡¡Income¡¡
¡¡
¡¡¡¡¡¡¡¡Industry¡¡of¡¡the¡¡modern¡¡sort¡¡¡¡mechanical£»¡¡specialised£»¡¡
standardised£»¡¡drawn¡¡on¡¡a¡¡large¡¡scale¡¡¡¡is¡¡highly¡¡productive¡£¡¡
When¡¡this¡¡industrial¡¡system¡¡of¡¡the¡¡new¡¡order¡¡is¡¡not¡¡hindered¡¡by¡¡
outside¡¡control¡¡it¡¡will¡¡yield¡¡a¡¡very¡¡large¡¡net¡¡return¡¡of¡¡output¡¡
over¡¡cost£»¡¡¡¡counting¡¡cost¡¡in¡¡terms¡¡of¡¡man¡¡power¡¡and¡¡necessary¡¡
consumption£»¡¡so¡¡large£»¡¡indeed£»¡¡that¡¡the¡¡cost¡¡of¡¡what¡¡is¡¡
necessarily¡¡consumed¡¡in¡¡productive¡¡work£»¡¡in¡¡the¡¡way¡¡of¡¡materials£»¡¡
mechanical¡¡appliances£»¡¡and¡¡subsistence¡¡of¡¡the¡¡workmen£»¡¡is¡¡
inconsiderable¡¡by¡¡comparison¡£¡¡The¡¡same¡¡thing¡¡may¡¡be¡¡described¡¡by¡¡
saying¡¡that¡¡the¡¡necessary¡¡consumption¡¡of¡¡subsistence¡¡and¡¡
industrial¡¡plant¡¡amounts¡¡to¡¡but¡¡an¡¡inconsiderable¡¡deduction¡¡from¡¡
the¡¡gross¡¡output¡¡of¡¡industry¡¡at¡¡any¡¡time¡£¡¡So¡¡inordinately¡¡
productive¡¡is¡¡this¡¡familiar¡¡new¡¡order¡¡of¡¡industry¡¡that¡¡in¡¡
ordinary¡¡times¡¡it¡¡is¡¡forever¡¡in¡¡danger¡¡of¡¡running¡¡into¡¡excesses¡¡
and¡¡turning¡¡out¡¡an¡¡output¡¡in¡¡excess¡¡of¡¡what¡¡the¡¡market¡¡¡¡that¡¡is¡¡
to¡¡say¡¡the¡¡business¡¡situation¡¡¡¡will¡¡tolerate¡£¡¡There¡¡is¡¡constant¡¡
danger¡¡of¡¡¡¨overproduction£»¡¨¡¡So¡¡that¡¡there¡¡is¡¡commonly¡¡a¡¡large¡¡
volume¡¡of¡¡man¡¡power¡¡unemployed¡¡and¡¡an¡¡appreciable¡¡proportion¡¡of¡¡
the¡¡industrial¡¡plant¡¡lying¡¡idle¡¡or¡¡half¡¡idle¡£¡¡It¡¡is¡¡quite¡¡
unusual£»¡¡perhaps¡¡altogether¡¡out¡¡of¡¡the¡¡question£»¡¡to¡¡let¡¡all¡¡or¡¡
nearly¡¡all¡¡the¡¡available¡¡plant¡¡and¡¡man¡¡power¡¡run¡¡at¡¡full¡¡capacity¡¡
even¡¡for¡¡a¡¡limited¡¡time¡£¡¡
¡¡¡¡¡¡¡¡It¡¡is£»¡¡of¡¡course£»¡¡impossible¡¡to¡¡say¡¡how¡¡large¡¡the¡¡net¡¡
aggregate¡¡product¡¡over¡¡cost¡¡would¡¡be¡¡¡¡counting¡¡the¡¡product¡¡in¡¡
percentages¡¡of¡¡the¡¡necessary¡¡cost¡¡¡¡in¡¡case¡¡this¡¡industrial¡¡
system¡¡were¡¡allowed¡¡to¡¡work¡¡at¡¡full¡¡capacity¡¡and¡¡with¡¡free¡¡use¡¡of¡¡
all¡¡the¡¡available¡¡technological¡¡knowledge¡£¡¡There¡¡is¡¡no¡¡safe¡¡
ground¡¡for¡¡an¡¡estimate£»¡¡for¡¡such¡¡a¡¡thing¡¡has¡¡never¡¡been¡¡tried£»¡¡
and¡¡no¡¡near¡¡approach¡¡to¡¡such¡¡a¡¡state¡¡of¡¡things¡¡is¡¡to¡¡be¡¡looked¡¡
for¡¡under¡¡the¡¡existing¡¡circumstances¡¡of¡¡ownership¡¡and¡¡control¡£¡¡
Even¡¡under¡¡the¡¡most¡¡favorable¡¡conditions¡¡of¡¡brisk¡¡times¡¡the¡¡
business¡¡situation¡¡will¡¡not¡¡permit¡¡it¡£¡¡There¡¡will¡¡at¡¡least¡¡always¡¡
be¡¡an¡¡indefinitely¡¡large¡¡allowance¡¡to¡¡be¡¡reckoned¡¡for¡¡work¡¡and¡¡
substance¡¡expended¡¡on¡¡salesmanship£»¡¡advertising£»¡¡and¡¡competitive¡¡
management¡¡designed¡¡to¡¡increase¡¡sales¡£¡¡This¡¡line¡¡of¡¡expenditures¡¡
is¡¡a¡¡necessary¡¡part¡¡of¡¡businesslike¡¡management£»¡¡although¡¡it¡¡
contributes¡¡nothing¡¡to¡¡the¡¡output¡¡of¡¡goods£»¡¡and¡¡in¡¡that¡¡sense¡¡it¡¡
is¡¡to¡¡be¡¡counted¡¡as¡¡a¡¡necessary¡¡deduction¡¡from¡¡the¡¡net¡¡productive¡¡
capacity¡¡of¡¡the¡¡industrial¡¡system¡¡as¡¡it¡¡runs¡£¡¡It¡¡would¡¡also¡¡be¡¡
extremely¡¡difficult¡¡to¡¡make¡¡allowance¡¡for¡¡this¡¡deduction£»¡¡since¡¡
much¡¡of¡¡it¡¡is¡¡not¡¡recognised¡¡as¡¡such¡¡by¡¡the¡¡men¡¡in¡¡charge¡¡and¡¡
does¡¡not¡¡appear¡¡on¡¡their¡¡books¡¡under¡¡any¡¡special¡¡descriptive¡¡
heading¡£¡¡In¡¡one¡¡way¡¡and¡¡another£»¡¡and¡¡for¡¡divers¡¡and¡¡various¡¡
reasons£»¡¡the¡¡net¡¡production¡¡of¡¡goods¡¡serviceable¡¡for¡¡human¡¡use¡¡
falls¡¡considerably¡¡short¡¡of¡¡the¡¡gross¡¡output£»¡¡and¡¡the¡¡gross¡¡
output¡¡is¡¡always¡¡short¡¡of¡¡the¡¡productive¡¡capacity¡¡of¡¡the¡¡
available¡¡plant¡¡and¡¡man¡¡power¡£¡¡
¡¡¡¡¡¡¡¡Still£»¡¡taken¡¡as¡¡it¡¡goes£»¡¡with¡¡whatever¡¡handicap¡¡of¡¡these¡¡
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the¡¡net¡¡product¡¡greatly¡¡exceeds¡¡the¡¡cost¡£¡¡So¡¡much¡¡so¡¡that¡¡
whatever¡¡is¡¡required¡¡for¡¡the¡¡replacement¡¡of¡¡the¡¡material¡¡
equipment¡¡consumed¡¡in¡¡production£»¡¡plus¡¡¡¨reasonable¡¡returns¡¨¡¡on¡¡
this¡¡equipment£»¡¡commonly¡¡amounts¡¡to¡¡no¡¡more¡¡than¡¡a¡¡fraction¡¡of¡¡
the¡¡total¡¡output¡£¡¡The¡¡resulting¡¡margin¡¡of¡¡excess¡¡product¡¡over¡¡
cost¡¡plus¡¡reasonable¡¡returns¡¡on¡¡the¡¡material¡¡equipment¡¡is¡¡due¡¡to¡¡
the¡¡high¡¡productive¡¡efficiency¡¡of¡¡the¡¡current¡¡state¡¡of¡¡the¡¡
industrial¡¡arts¡¡and¡¡is¡¡the¡¡source¡¡of¡¡that¡¡free¡¡income¡¡which¡¡gives¡¡
rise¡¡to¡¡intangible¡¡assets¡£¡¡The¡¡distinction¡¡between¡¡tangible¡¡
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the¡¡difference¡¡is¡¡sufficiently¡¡broad¡¡and¡¡sufficiently¡¡well¡¡
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is¡¡taken¡¡to¡¡confuse¡¡these¡¡terms¡¡with¡¡needless¡¡technical¡¡verbiage¡£¡¡
¡¡¡¡¡¡¡¡To¡¡avoid¡¡debate¡¡and¡¡digression£»¡¡it¡¡may¡¡be¡¡remarked¡¡that¡¡
¡¨reasonable¡¡returns¡¨¡¡is¡¡also¡¡here¡¡used¡¡in¡¡the¡¡ordinary¡¡sense¡¡of¡¡
the¡¡expression£»¡¡without¡¡further¡¡definition£»¡¡as¡¡being¡¡sufficiently¡¡
understood¡¡and¡¡precise¡¡enough¡¡for¡¡the¡¡argument¡£¡¡The¡¡play¡¡of¡¡
motives¡¡and¡¡transactions¡¡by¡¡which¡¡a¡¡rough¡¡common¡¡measure¡¡of¡¡
reasonable¡¡returns¡¡has¡¡been¡¡arrived¡¡at¡¡is¡¡taken¡¡for¡¡granted¡£¡¡A¡¡
detailed¡¡examination¡¡of¡¡all¡¡that¡¡matter¡¡would¡¡involve¡¡an¡¡extended¡¡
digression£»¡¡and¡¡nothing¡¡would¡¡be¡¡gained¡¡for¡¡the¡¡argument¡£¡¡
According¡¡to¡¡the¡¡traditional¡¡view£»¡¡which¡¡was¡¡handed¡¡on¡¡from¡¡the¡¡
period¡¡before¡¡the¡¡coming¡¡of¡¡corporation¡¡finance£»¡¡and¡¡which¡¡still¡¡
stands¡¡over¡¡as¡¡an¡¡article¡¡of¡¡common¡¡belief¡¡in¡¡the¡¡certified¡¡
economic¡¡theories£»¡¡¡¨capital¡¨¡¡represents¡¡the¡¡material¡¡equipment£»¡¡
valued¡¡at¡¡its¡¡cost£»¡¡together¡¡with¡¡funds¡¡in¡¡hand¡¡required¡¡as¡¡a¡¡
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view£»¡¡corporation¡¡securities¡¡are¡¡taken¡¡to¡¡cover¡¡ownership¡¡of¡¡the¡¡
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corporate¡¡capitalisation¡¡and¡¡made¡¡a¡¡basis¡¡on¡¡which¡¡to¡¡issue¡¡
corporate¡¡securities¡£¡¡Hence¡¡that¡¡stubborn¡¡popular¡¡prejudice¡¡
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finance¡¡has¡¡disposed¡¡of¡¡the¡¡quarrel¡¡by¡¡discontinuing¡¡the¡¡relevant¡¡
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¡¡¡¡¡¡¡¡There¡¡is¡¡still¡¡a¡¡recognised¡¡distinction¡¡between¡¡tangible¡¡
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is¡¡a¡¡question¡¡of¡¡capitalisation¡¡of¡¡the¡¡available¡¡assets¡£¡¡So¡¡that£»¡¡
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only¡¡by¡¡comparison¡¡with¡¡the¡¡cost¡¡of¡¡the¡¡assets¡¡which¡¡it¡¡covers£»¡¡
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intelligible¡¡distinction¡¡is¡¡maintained¡¡in¡¡common¡¡usage£»¡¡between¡¡
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represent¡¡the¡¡productive¡¡capacity¡¡of¡¡the¡¡plant£»¡¡considered¡¡as¡¡a¡¡
mechanical¡¡apparatus¡¡engaged¡¡in¡¡an¡¡industrial¡¡process¡¡for¡¡the¡¡
production¡¡of¡¡goods¡¡or¡¡services£»¡¡it¡¡is¡¡presumed¡¡to¡¡rest¡¡on¡¡the¡¡
market¡¡value¡¡of¡¡the¡¡mechanical¡¡output¡¡of¡¡the¡¡plant¡£¡¡The¡¡plant¡¡is¡¡
a¡¡productive¡¡factor¡¡because¡¡and¡¡in¡¡so¡¡far¡¡as¡¡it¡¡turns¡¡to¡¡
practical¡¡account¡¡the¡¡state¡¡of¡¡the¡¡industrial¡¡arts¡¡now¡¡in¡¡use£»¡¡¡¡
the¡¡community's¡¡joint¡¡stock¡¡of¡¡technological¡¡knowledge¡£¡¡So¡¡soon£»¡¡
or¡¡so¡¡far£»¡¡as¡¡the¡¡plant¡¡and¡¡its¡¡management¡¡falls¡¡short¡¡of¡¡meeting¡¡
the¡¡ordinary¡¡requirements¡¡of¡¡this¡¡current¡¡state¡¡of¡¡the¡¡industrial¡¡
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commonly¡¡employed£»¡¡the¡¡whole¡¡works¡¡ceases¡¡by¡¡that¡¡much¡¡to¡¡be¡¡a¡¡
productive¡¡factor¡£¡¡The¡¡productive¡¡efficiency£»¡¡and¡¡the¡¡productive¡¡
value£»¡¡of¡¡any¡¡given¡¡item¡¡of¡¡industrial¡¡equipment¡¡is¡¡measured¡¡by¡¡
its¡¡effective¡¡use¡¡of¡¡the¡¡technological¡¡knowledge¡¡current¡¡in¡¡the¡¡
community¡¡for¡¡the¡¡time¡¡being¡£¡¡So¡¡also£»¡¡the¡¡productive¡¡value¡¡of¡¡
any¡¡given¡¡body¡¡of¡¡natural¡¡resources¡¡land£»¡¡raw¡¡materials£»¡¡motive¡¡
power¡¡¡¡is¡¡strictly¡¡dependent¡¡on¡¡the¡¡degree¡¡in¡¡which¡¡it¡¡fits¡¡
into¡¡the¡¡industrial¡¡system¡¡as¡¡it¡¡runs¡£¡¡
¡¡¡¡¡¡¡¡This¡¡dependence¡¡of¡¡productive¡¡value¡¡on¡¡conformity¡¡to¡¡and¡¡use¡¡
of¡¡the¡¡state¡¡of¡¡the¡¡industrial¡¡arts¡¡is¡¡constantly¡¡shown¡¡in¡¡the¡¡
case¡¡of¡¡land¡¡and¡¡similar¡¡natural¡¡resources£»¡¡by¡¡the¡¡fluct