Natural forces matter: A note on Simon N. Patten's critique of John B. Clark's theory of distribution

This note analyses Simon N. Patten's criticism of John B. Clark's marginal productivity theory of distribution for its neglect (among other things) of the role of environmental factors in determining economic value in markets. Whereas Clark's theory centered on the distribution between labor and capital income, with land earnings understood as a sub-part of interest, Patten intended to retain the classics' notion of rent as unearned income. In his early writings he saw rent stemming from returns based on monopolistic control over markets or privilege, but writing in 1902, shortly after the publication of Clark's Distribution of Wealth, he introduced a distinction between labor and labor force. By labor Patten meant a number of days' work performed by human beings, while by labor force he referred to any “mode of motion” that makes capital productive, including environmental assets and services. These natural forces, which come into play with an increase in capital, produce an excess above marginal cost—a “social gain” which is transferred from the community to the capitalist/rentier, clashing with Clark's idea of a just economic reward based on the assumption that each factor earns its marginal product.