he wage bill is but one of the groups of costs. Profits are
the net result of many influences. Chief among these is the skill in
planning and conducting the business. This function of management is
either performed by the same person that is carrying the financial
risk, or by some salaried employee selected by him. It is this
management function the reward of which should, in theory, be made
to vary with the amount of profits; and in fact such an arrangement
(managerial profit-sharing, so to speak) is undoubtedly in operation
in thousands of cases, but is not included in the usual conception of
profit-sharing. Many salaried managers are in receipt of a share of
profits and are gradually acquiring an interest in partnerships or a
larger share of ownership in the enterprise for which they work. But
ordinary profit-sharing is not in accord with the general trend
toward the centralization of responsibility in the hands of competent
managers, ensuring to the worker a definite amount in advance, as
high as conditions make possible. The system of premiums, or bonus
payments, for output, where it can be safeguarded against abuses,
gives in most cases better results and is rapidly spreading. It is
sounder in conception and works better in practice as a method of
remuneration for most of the workers.

Sec. 13. #Purpose of producers' cooeperation.# Since the early part of the
nineteenth century many well-wishers of humanity have cherished high
hopes that the whole wage system might gradually be replaced by
the plan of producers' cooeperation among workingmen. Producers'
cooeperation is the union of workers in a self-employing group,
performing for themselves the enterpriser's function. The workers hope
to get what seems to them to be a needless drain of profits into the
pockets of the employer and unnecessarily high salaries to managers.
To do this they must perform the enterpriser's function as to
investment and risk. Collectively or through their representatives
they must undertake to furnish capital and management as well
as hand-work. The capital may be supplied either by the members,
individually or collectively, or may be borrowed from outsiders,
who are thus merely passive investors. Usually the return to capital
invested by members is limited to 5 or 6 per cent, so that this part
of the capital likewise is treated as a passive investment, and all
the real variable profits are distributed to the members as wages. The
hope