Functional VS Personal Distribution
It may be pointed out that the distribution discussed here is personal. It is distribution Iwt among individuals but among agents of production. The same person may represent in his person all the four agents, e.g. a peasant-proprietor. He is the entrepreneur, the labourer, the capitalist (for he has some capital of his own), and the landlord all rolled in one. Here we do not discuss how much he earns as an individual hut the reward that he gets separately for supplying each factor of production. Thus, we study distribution in the form of rent, wages, interest and profits ami not among the different individuals in the country.
It nIay also be understood that the prices of the factors of production arc really the prices paid for them by the films using them in producing a commodity. From the point of view of the firms they arc the cost of production. In other words what is cost to a firm is income to the factors of production. Wages. rent. interest. profit arc the functional corners respectively of the labourer, the landlord. the capitalist and the entrepreneur, The reward that each factor gets is the price paid I age I for his service hy the entrepreneur. Thus, In one angle it is
income and from the other it IS cost