Text L Money and Labour

Labour is any work performed for an employer at a negotiated rate while profit is the surplus, which accumulates as a result of productive work. The employer obtains this surplus after he pays the necessary expense of his business and the wages of his employees. He may be required to share the surplus with others who have provided the capital with which he started his business. Mosi businesses need capital in order to start productive work, and the capital pays for the accommodation, machinery and other items, which the business needs There is always an element of risk in providing capital and starting a business The business may not be successful. The employees of the business do not bear this risk, but the employers do bear it. If the business is successful, the risk ha been justified and the invested capital earns part of the profits as a return on the investment.