§6. _Risk-taking and Control_. But there is an allied confusion of more importance. We commonly suppose it to be a leading feature of our present "capitalist system" that the control of industry rests in the hands of those who supply the capital. Nor, as a general statement, is this untrue. But it conceals the essential point. Strictly speaking, it is risk-taking with which control is associated. The mere lending of money carries with it no title to control. Governments and municipalities concede no such title to the subscribers to their loans; nor does a company to its debenture holders. The shareholders' ultimate control is based upon the fact that they bear the financial risks of the concern. Nor is this a matter of mere legal form. It is not uncommon for ordinary shares to carry with them a greater voting power than the preference shares of a corresponding value. The principle which such arrangements endeavor to express is clear: control should rest with him who bears the risk. It is with this principle rather than with a mulish insistence on the rights of property, that advocates of "workers' control" and the like have got to reckon. It is upon this ground that (as they may quite conceivably do) they must make good their case. §7. _General Analysis of Profits_. Let us conclude this chapter by clearing the ground for the next. Earnings of management, payments for risk-taking and for the special knowledge and advantages associated with it, are ingredients of the gross profits of a business. The chief element that remains is that of interest on capital. Frequently, indeed, it is not the only one. As we saw in the last chapter, a farmer may not be required by his landlord to pay the full economic rent for his farm; and he may therefore make profits above the normal level, above the ordinary return for his own services, his own capital expenditure, and the risks to which he is necessarily exposed. In such a case the farmer is really the recipient, as we have already suggested, of part of the economic rent of the land; and an element of rent accordingly enters into his gross profits. But profits may include a surplus element which may arise in a great variety of other ways. A business may possess some decided advantage which is not open to competitors; and it may reap high profits accordingly. You can, for instance, if you choose, regard the high money profits, which, as was suggested in Chapter IV, are likely to accrue in future to the owners of pre-war factories, as a surplus profit of this kind. But while, as this illustration indicates, the phenomenon of surplus profits becomes of very great importance when we seek to study the distribution of wealth, it need not detain us here. For the surplus element arises only in so far as the costs of a business are lower than the marginal costs; and it is the marginal costs, which, with good reason, we are now endeavoring to analyze. The marginal costs must include a normal profit, i.e.