er paying the wages of labor.

_The Importance of the Residuum._--The above reasoning does not
satisfactorily show what influence the capitalist can use to make the
_entrepreneur_ pay over to him the entire amount of the residuum. It
shows that after paying wages the _entrepreneur_ will have a certain
amount left, but it is not thus far clear how the capitalist can get
it from him. The fact that the laborers get only the amount
represented by _ABDE_ and that the whole amount is _ACDE_ does,
however, at least show that the _entrepreneur_ has the amount _BCD_
left in his hands, and that he is _able_ to pay this amount to the
capitalist if by any appeal to competition the capitalist is able to
make him do it.

_Interest not determined Residually._--The fact is that the interest
on capital is fixed exactly as are the wages of labor.

We will let another figure represent the entire product of the same
amount of labor and the same amount of capital that were represented
in the former case. We will assume that there is at the outset a
complete force of laborers, and that no men are added to it or taken
from it; but we will gradually introduce units of capital instead of
units of labor as in the former case. The amount of capital is now
represented by the line _A'E'_ and the product of the first unit of it
by the line _A'C'_. The product of the successive units declines along
the curve _C'D'_. The final unit of capital then brings into existence
the amount of wealth represented by _E'D'_. As every other unit now
produces the same amount, the capital as a whole creates the quantity
represented by _A'B'D'E'_ and every unit of it makes its own separate
contribution to that amount. In this we have simply applied to capital
and its earnings the principle we formerly applied to labor and its
earnings.

[Illustration]

_General Form of the Law of Final Productivity._--This principle is
the law of final productivity, one of those universal principles which
govern economic life in all its stages of evolution. Either one of the
two agents of industry, used in increasing quantities in connection
with a fixed amount of the other agent, is subject to a law of
diminishing returns. The final unit of the increasing agent produces
less than did the earlier units in the series. This does not mean that
at any one time one unit produces less than another, for at any one
time all are equally productive. It means that the tenth unit produces