=Profits.=—The return received by the organizers and managers of productive enterprises is commonly known as profit. The amount of their profit depends upon the degree of success with which they can produce goods for less than the selling price. Every employer or organizer assumes a considerable amount of risk. He obligates himself to pay definite amounts for the use of capital, materials, and labor no matter what the value of the finished products. If this value be less than the cost of production, he loses; if it be more, he gains. Losses, if continued, mean bankruptcy. Gains are profits and, if continued, make him rich. It will be seen, therefore, that the employers or organizers of production take more risk than those who supply the materials, the capital, or the labor. [Sidenote: What determines the rate of profits.] Their success, in other words their rate of profits, depends in general upon the degree of managing and organizing ability which they display; but it sometimes happens that profits will be high in all branches of production for a time irrespective of the employer’s skill. The price of the finished product may rise without an immediate and proportionate increase in the cost of materials, interest, and wages. This situation, while it continues, affords an opportunity for abnormal profits or “profiteering” as it is often called. Abnormal profits may also be due to the existence of a monopoly in a particular form of production. [Sidenote: The economic importance of government.] =Government as a Factor in Production.=—It has not been customary to speak of government as one of the essential factors in production, but a few moments’ reflection will show that its part in the process of industry and trade is very important. To begin with, the government determines what forms of production may be carried on and by what methods. It forbids certain forms, such as the making of intoxicants, and strictly limits others, such as the manufacture of narcotics. It gives to some individuals and corporations the exclusive right to produce certain articles under patents. It determines the forms of business organizations, the responsibilities of employers, the rules relating to partnership, and the powers of corporations. It sets a limit upon the rate of interest by means of usury laws and through its banks may virtually control the rate (see p. 438). The government, moreover, makes rules for the conservation of natural resources and to some extent fixes the relation between the employer and his workers. At times it even fixes prices. It provides courts and commissions for the settlement of disputes affecting production. Finally, the whole system of private property rests upon the support of the government. [Sidenote: Taxes as an element in cost.]