Income and Growth

Abstract

The preceding four chapters considered the distribution of incomes as a reflection of the relative scarcity of factors. A rise in profits indicated the economy’s reward for growth and reflected a rising scarcity of capital for growth. The national wages bill reflected the scarcity of labour for current activities. Rent reflected the unalterable past. Salaries were defined as a compound of wages and rent, so that they could be considered as a mixture of present and past, though the salary-earner’s ability to anticipate future growth also implied a profit element. Ignoring the unalterable past, it was possible to present much of the argument in terms of a two-factor model, where the two factors were labour and capital and the appropriate factor rewards were wages and profit; and where wages represented the reward for current ways of carrying on economic activities, and profits the reward for the venturesome.