And like labor, the return that capital can get depends on the best available place where it can be used without paying rent. First and foremost, we must recognize that while profit is an important consideration for individual investors and entrepreneurs, it has nothing to do with the Laws of Distribution at all. In this course we are concerned with the laws that determine how society s entire wealth output the wealth pie is distributed among the factors that produce it. A big part of profit, for example, is the premium one might get on a risky investment. But if we are considering the whole society, we see that risk-taking winners and losers cancel each other out.
Risk premium is a factor for individuals, but in the whole economy it is a zero sum.
A great deal of what George refers to as spurious capital and profits commonly mistaken for interest is actually income that comes from land. Today, corporate profits include large rents, and can be steady or rising even when the return on capital is falling. Land is needed for all production and its supply is fixed. Therefore, whenever production increases, demand for the fixed supply of land will increase and the proportionate share of wealth taken by landowners will be greater. With respect to each other, wages and interest tend toward an equilibrium in which neither factor sustains an advantage.