The first question that suggests itself in the discussion of functional distribution is as to whether it is actually governed by natural law, so-called. It is observable that the amounts which go to rent, to wages, to interest, and to profits are regularly quite constant. What determines this? The socialists contend that natural distribution is the only just method and insist that the state should regulate this just distribution; they are not clear, however, as to what this natural method is. Henry George uses the same phrase when he says, “the just distribution of wealth is manifestly a natural distribution of wealth, and this is that which gives to him who makes it and secures to him who saves it.” All such statements beg the question for they all turn on the use of the word natural. Many modern economists are inclined to assert that the question of distribution is not an ethical one, not a question of what ought to be but of what 122 is. Thus Professor Tetter says[40]: “Distribution in economics is the seasoned explanation of the way in which the total product of a society is divided among its members. It is a logical question and not an ethical one.” And Professor Clark writes, “There is, in short, a deep-acting natural law at work amid the confusing struggles of the labor market.” It will not be possible, in the brief limits of this section, to take up all the theories as to the way in which this distribution is effected among the claimants to a share of the product, but a few of the more important practical results may be stated. We shall take up the four different factors in turn.
Rent is usually defined as the return for the use of natural objects and agencies. Rent has usually been low in the United States because of the large amount of land and other natural agents available. In general it may be said that when any factor of production is relatively abundant in comparison with the other factors, its share of the product will be small.[41] Henry George, however, argues that as the amount of land is limited and is now practically all taken up, the future will see a constantly increasing demand for land, and hence the landlords will absorb most of the future income of society. This is true of most of land and other natural agents especially in demand, as choice sites in our cities, anthracite coal mines, etc. The practical problem that suggests itself is, do we wish private property in land? The socialists answer no, but the individualists insist that the best use has been and can be made of land only by reducing it to private ownership. In practice, however, even in modern individualistic societies, the absolute and unregulated use of land by the owner is restricted in various ways.