BOOK II. The Chief Factor in the Production of the

THE CHIEF FACTOR IN THE PRODUCTION OF THE NATIONAL INCOME

I. Of the various Factors in Production, and how to distinguish the Amount produced by each—

The Cause of Production generally 84 The Production of Given Quantities 85 Production a Century Ago 86 Amount of Capital employed in it 87 Land, Capital, and Human Exertion 88 How much produced by each 89 The chief Practical Problem in Contemporary Economics 90

II. How the Product of Land is to be distinguished from the Product of Human Exertion—

Rent the Product of Land 93 The Accepted Theory of Rent illustrated by an Example 94 The Product of Agricultural Labour 96 The Product of Land 97 Maximum Produce of Labour 98 Surplus produced by Land 99 Land a Producing Agent as distinct from Labour 100 The Existence of Rent not affected by Socialism 102 Rent necessarily the Property of whoever owns the Land 104 The Argument of this Volume embodied in the case of Rent 106

III. Of the Products of Machinery or Fixed Capital, as distinguished from the Products of Human Exertion—

Capital of Two Kinds 108 The part of the Product produced by Machinery or Fixed Capital 110 Example of Product of Machinery as distinct from that of Labour 112 The Products of a Machine necessarily the Property of Owner 114 The Cotton Industry in the Last Century 116 Arkwright’s Machinery 118 The Iron Industry of Great Britain 119 Machinery and Production of Iron 120 Machinery and Wage Capital 121

IV. Of the Products of Circulating Capital, or Wage Capital, as distinguished from the Products of Human Exertion—

Simplest Function of Wage Capital 122 Distinguishing Function of Modern Wage Capital 124 Wage Capital mainly productive as a means of directing Labour 126 Slaves and Free Labourers 128 Wage Capital and Progress 129 Wage Capital as related to the production of New Inventions 130 Capital the Tool of Knowledge 132 Wage Capital and Arkwright 133 Wage Capital as Potential Machinery 134 How to discriminate the amount produced by Wage Capital 136

V. That the Chief Productive Agent in the modern world is not Labour, but Ability, or the Faculty which directs Labour—

The best Labour sometimes useless 138 Labour not the same faculty as the faculty which directs Labour 140 Extraordinary confusion in current Economic Language 142 Labour a Lesser Productive Agent 144 Ability a Greater Productive Agent 145 The Vital Distinction between Ability and Labour 146 Ability not a form of Skilled Labour 148 Capital applied successfully the same thing as Ability 150 Obvious Exceptions 152 Ability the Brain of Capital 153 Ability as the Force behind Capital the Cause of all Progress 154

VI. Of the Addition made during the last Hundred Years by Ability to the Product of the National Labour. This Increment the Product of Ability—

Production in the Last Century 156 Growth of Agricultural Products 158 Growth of Production of Iron 159 Ability and Agriculture in the Last Century 160 The Maximum Product that can be due to Labour alone 162 Present Annual Product of Ability in the United Kingdom 164 The Product of Capital virtually Product of the Ability of the Few 166