Knowledge that Transforms

In his brilliant and valuable book on The Economics of Overhead Costs,' Professor J. M. Clark gives an arithmetical example to illustrate the theory of distribution by marginal productivity which seems to the writer to involve a slip worth pointing out. By way of background a few observations are necessary. Discussion of that famous theory has strangely neglected the apparently fundamental question of whether distribution in accordance with its principles would actually result in an exhaustive division of the product of industry among the factors of production. That is, if each unit of each factor is paid what any one unit contributes to the total product, will there be enough product to go around, and no more? If this is not true, it is evident that the theory must be abandoned at once or fundamentally modified.