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CHAPTER 21The Function of ProfitsThe indignation shown by many people today at the mention of thevery word “profits” indicates how little understanding there is ofthe vital function that profits play in our economy. To increase ourunderstanding, we shall go over again some of the ground already coveredin chapter 14 on the price system, but we shall view the subject froma different angle.Profits actually do not bulk large in our total economy. The netincome of incorporated business in the fifteen years from 1929 to1943, to take an illustrative figure, averaged less than 5 percent of thetotal national income. Yet “profits” are the form of income towardwhich there is most hostility. It is significant that while there is a word“profiteer” to stigmatize those who make allegedly excessive profits,there is no such word as “wageer”—or “losseer.” Yet the profits ofthe owner of a barber shop may average much less not merely thanthe salary of a motion picture star or the hired head of a steel corporation,but less even than the average wage for skilled labor.The subject is clouded by all sorts of factual misconceptions. Thetotal profits of General Motors, the greatest industrial corporation inthe world, are taken as if they were typical rather than exceptional. Fewpeople are acquainted with the mortality rates for business concerns.They do not know (to quote from the TNEC studies) that “should141