> "a succession of cases sufficient to evaluate the judgment or 
determine its probable value transforms the profit into a wage." 
(Knight, 1921: 311)
 >
 > then that profit is really a "wage" -- a return to a
 > productive factor, and not a profit.
 > So over the long haul, or in the aggregate,
 > my interpretation emerges:
 > any profit that is not the result of better
 > judgment is just good luck.
 > Ross Emmett


In the paradigm of classical economics, the three factors of 
production - land, labor, and capital goods - are distinct sets; 
moreover all inputs fall into one of the three factors, as do the 
returns from factors.

Thus profit is not one of the classical factors, and profit income is 
not separate from the returns to factors.  Profit is either wages, 
land rent, or a yield from capital goods.  In the classical taxonomy, 
profit cannot get transferred to wages, because they are already a 
return to labor, or else a return to the other factors.

By classical taxonomy, the gains, i.e. economic profit, from 
self-employment are thus all wages.  A lucky entrepreneur who 
stumbles into a product that yield a high return obtains a wage, just 
as an employee who obtains a high remuneration in a job he obtains 
due to chance is a wage.

One may distinguish types of wages, such as those of employees 
(marginal products of labor) versus those from owner-entrepreneurship 
(as residual claimants).

Moroever, wages can be distinguished from transfers gifted to workers 
or entrepreneurs, or stolen by them.  An overpaid executive may be 
receiving gains that properly belong to the shareholders, and is 
transferred from them to the executive by a corrupt board; this is 
not really a wage due to his contribution, but rather looting.

Fred Foldvary