whereas I distinctly asked1 how the emergence of a net return on capital was explained, Professor Clark ascribes to me an entirely different question,-namely, "how we know that there is any net profit whatsoever" (p. 362). That a net return on capital exists is obvious enough, and I have asked no question about it. Why a net return on capital exists is not obvious, and all Professor Clark's experiences with his plough factory do not suffice to tell us.

Finally, those very detailed descriptions which Professor Clark quotes at length (p. 357) from his book, with the illustrations of A, B, C, and H, tell us nothing about it. They form a very neat description of the division of labor and the parcelling out of the steps in production. But they contain not a word of real explanation. They do not explain, for instance, why the wages of the laborers in Group H (who, to be sure, cannot be clothed in the machines. which they make nor live in the factories which they erect) do not exhaust the whole value of the commodities produced by them. Everything that Professor Clark says about wear and tear, about replacement of capital, is simply a matter of description: it explains nothing." I might have cited this same passage of Professor Clark's book to show that Professor Clark fails to undertake that investigation of the problem of rent, which I miss in his book. Professor Clark, very gently and politely, but none the less clearly, accuses me (p. 359) of not having given an accurate representation of his views. I fear that this accusation has no better basis than a constant confusion on Professor Clark's own part between a simple statement of the facts, such as he has really given, and an explanation of the facts, such as he fails to give either in the passage

1 See pages 261, 263.

2 It is significant that Professor Clark himself introduces this quotation with the remark (p. 357) that in it the mode in which capital good provides for the emergence of its successor is described.

which he has quoted or in others referred to by me. Further, Professor Clark, again in the way of correcting the remark made by me on page 259, lays stress upon his own statement that the share of the produce of a capital good which is needed to replace it does not go wholly to labor, but that part goes to capital (p. 360). I am glad to take note of this statement of his, but believe that a little misunderstanding lies in it. I had no intention of setting forth anything inconsistent with this statement. My reasoning rests upon the following undenied and undeniable circumstances. In his diagram, Professor Clark treats as the product created by any added unit of capital, not the whole "gross product" of the co-operation of capital goods, but only a part of that gross product; namely, that part which goes as net interest to capital. Now whatever goes as net interest to capital surely has nothing to do with the replacement or wear and tear: hence I concluded that Clark regards as the product of capital only that part of the total product which is free from any such claims, or, to repeat, the amount by which "the gross product exceeds what is needed for the replacement of the capital consumed in production." Further, in his diagram, Professor Clark turns over to the laborers as wages everything which does not go as net interest to capital: whence I concluded that Professor Clark must have credited to labor the entire remainder of product produced with the co-operation of capital goods, that is, that part which does not go as net interest on capital. I do not believe that Professor Clark would be disposed or would be able to raise any objection against this interpretation or reasoning concerning his views.

On the other hand, I had no intention, as Professor Clark evidently assumes I had, to undertake any more exact statement as to how much Professor Clark would turn over to capital in his diagram as net interest. More par

ticularly, I had no intention of limiting this amount to the sum which one particular capitalist would get as net interest; namely, that capitalist who conducts the last stage in production and who is the owner of the completed capital good which yields a specified gross return. To put it more concretely, I am well aware that the gross yield of a spinning machine suffices to yield a net return, not only to the owner of the machine, but to the capitalists of the preceding stages who were concerned with the creation of the machine. In the language which is pertinent to the present discussion, net interest and wear and tear in the last stage of production are not identical with net interest and wear and tear of all the stages which lead to the final gross yield. I have no intention of ascribing any erroneous opinions on this subject to Professor Clark. Hence, as the attentive reader will see, I did not use the precise language which my honored opponent (no doubt in good faith) puts in my mouth,-language which would have been inaccurate. I did not say, as Professor Clark intimates that I did, that that part of the yield of a capital good which is not net income "for its owner" goes entirely to labor. I made use purposely of more general expressions, which refer to the whole return necessary to bring both net interest and replacement of wear and tear.1

I must point out, however, that the whole question, whether Professor Clark ascribes to capital a larger or a smaller sum, lies outside the scope of my criticisms. These bore not upon the extent of the shares ascribed on the one. hand to capital as net interest, on the other hand to labor as wages, least of all on any ascription of too little to capital or of too much to labor. Their essential point is

1 I beg to refer the reader to what I said on page 254 in the text and on pages 254 and 256 in the notes, where it will appear how carefully I refrained from undertaking any numerical expressions of Professor Clark's precise method of imputation. On the details of this method I am still in the dark, and any version of my own might not be in accord with Professor Clark's intentions.

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that the process of imputation from which he adduces the emergence of interest is not clearly brought before our eyes at the decisive point. To repeat the expression which I have already used, a net return to capital, distinct from any wear and tear, appears in his demonstration as a completed distillate, whereas the process of distillation by means of the apparatus of imputation is not made clear. "By the means of the apparatus of imputation": in these words I find the essential point of difference between them. Professor Clark has promised to explain interest through the rules of imputation, and, as I still must believe, he has failed to keep his promise. Whenever he applies his apparatus, whenever he uses arithmetical or geometrical modes of stating how much in the way of product is gained or lost with the increase or diminution of a factor of production, he is silent on the subject of gross and net yield of capital, and evades any explanation of the relation between them. Where he says anything at all on this subject, he no longer applies the apparatus of imputation. We find in his book sometimes examples of complete disregard of this crucial step and sometimes remarks in which there is lack of explanation and proof.

These omissions do not seem to me to be repaired in what Professor Clark now says in the latter part of his reply (p. 360). Is it any explanation of interest to say that one "finds" that the "plus quantity," which is due to the presence of capital, exceeds the "minus quantity," which is the result of wear and tear? And, notwithstanding all the objections of my honored opponent, are we not still in the domain of the arithmetic of magic, when it is said (on page 361) that the entire gross product is due to the existence of capital goods, and yet (on page 362) that only a much smaller product is due to the existence of the selfperpetuating mass of capital goods, namely, the net product, diminished by the amount necessary for replacement?

In whatever way Professor Clark pictures the relation between his true capital and his capital goods, it is certain that the mass of capital goods on page 362 can be no less than the capital on page 361, since between both there is, at least for a mathematical instant, complete identity. Without magic, how is it possible to ascribe to the existence of "a mass" of capital goods another and smaller product than to these same instruments or capital goods of which this mass consists? Is it a solution of this problem (a problem which I believe to be insoluble) or is it simply a bit of arbitrary procedure, if in the consideration of a mass of capital goods one part of its product is cut off at once and treated as if it did not exist? Does the fact that a flock of sheep must be slaughtered in order to get the mutton diminish the quantity of meat due to the flock? Has a married couple which brings five children into the world, and thereafter goes the way of mortals, bred only three children? The very laborers suffer a sort of wear and tear; to put it in other words, there is necessarily a consumption of goods and products, in order that their productive efforts should be maintained. Would Professor Clark maintain that this consumption is to be reckoned as a "minus quantity" or a" negative product" in the process of imputation, and that the "laboring forces" (it will be recalled that he distinguishes between the concrete workmen and the "working" or "laboring force") bring forth as the product of labor a share diminished by this waste?

How much product is due to an existing mass of capital goods is one question. Quite a different question is what factors bring about the existence of this mass of capital goods. This second question is not to be confounded with the first, not even in the way of a compensation. If Professor Clark had followed the strict rules of imputation in their natural sequence, he would certainly have come