The midland journal. (Rising Sun, Md.) 1885-1947, 1892-03-18
ECONOMIC DISTRIBUTION OF
EARNINGS VS. PROFIT
SHARING.
BY ALFRED DOLCE.

1t will be soen that this is essentially
different in principle from profit shar-
ing. IF this principle is sound it only
remains to develop a method for its
practical application. which is simply a
question of book keeping.
It shonld be remembered 10 consider.
ing this subject however that, since
profits are an economic surplus arising
from exceptional production, this ex-
ceptional production is due either to
superior management, or machinery. or
superior labor. This is generally rec
osnized in the case Of capital, but is
too frequently ignored in the case of
labor. Every manufacturer knows that
10 order 10 succeed in business he must
use the best machinery. He knows
also that the wear and tear of machinery
must be counted as constant item of.
cost in his production. Therefore in
order to maintain his plant, in a per-
manent state of efficiency. he must re-
serve q certain amount from every
years product as depreciation fund
which shall be adequate to replace the
machinery when worn out, or with a
better kind of machine whenever one is
discovered. In other words the sue
cessful manufacturer maintains an in
surance fund for his plant SO that he
will not be compelled to use inferior
machinery and thereby lose his profits
and perhaps bis principal
What is true in this respect of ma
chinery is equally true Of the other
factor in production, labor. Intelligent.
competent labor is no less important to
profitable production than is efficient
machinery. Nor is the wear and tear
or depreciation Of labor any less certain
than that of machinery, and therefore
should be provided for with just as
much regularity.
know that it is usually assumed that
employers have no interest iD their
laborers other than to hire them as
cheaply as possible. This / regard as
serious error. It's enc of the results
of the erroneous doctrine already re-
ferred to ''that profit rise as wages fall.'
and therefore that cheap labor is an
important factor in creating large
profits. This view however is contrary
to all experience. Instead of profits
being the largest where wages are the
lowest, we find that where wages are the
highest, capitalists are most prosperous
and profits most permanent.
In Asia and South America for in
stance, where laborers work for few
Csnts day, capitalists can hardly exist
at all, whereas in England and America,
where the highest wages prevail, profits
are the most permanent and capitalists
most numerous and prosperous.
Ifthe theory that low wages makehigh
profits were true, the Southern States
would have been very Eldorado for
manufacturers under slavery, yet every
body knows capital was less prosperous
in the Southern States with slave labor
than in Eastern States with dear labor.
Indeed it was not until generation
after slave labor was superseded by
free labor with higher intelligence
and standard of living among the
masses. that manufacturers could profit.
ably exist in the Southern States.
The reason for this is that high paid
laborers, besides being more intelligent
workers and better citizens, are larger
consumers, and consequently furnish a
more extensive, varied and permanent
market for the products Of capital.
which is the very basis of industrial
and social prosperity. In fact cheap
labor is ultimately greater menace to
the permanent prosperity of capital
than any other power in society, high
wages are always permanently beneficial
to the capitalist as well as to the laborer
and the community.
To constantly secure a high grade OF
labor the wear and tear or depreciation
of the laborer must be provided for.
The depreciation Of labor arises IN a
somewhat different form from that of
machinery, but its effects are substan-
tally the same.
Improved machines can be invented
aud manufactured, but improved lab
orers Gao only be developed. One may
work machiae till it breaks down,
then have new and perhaps better
one made to take its place. But this is
not true of labor. If laborers are poorly
paid and oyerworked, and i'll housed,
they not only become less efficient
es,.v...olras hut THAR childvan VIM are