Section XLII.

Of Capital.—The Classes Of Goods Of Which A Nation’s Capital Is Made Up.

Capital(269) we call every product laid by for purposes of further production. (§ 220).(270)

Hence, the capital of a nation consists especially of the following classes of goods:

A. Soil-improvements, for instance, drainage and irrigation works, dikes, hedges etc., which are, indeed, sometimes so far part of the land itself that it is difficult to distinguish them from it.(271) To this class belong all permanent plantations.

B. Buildings, which embrace workshops and storehouses as well as dwellings; also artificial roads of all kinds.

C. Tools, machines and utensils of every description;(272) the latter especially for personal service, and for the preservation and transportation of other goods. A machine is distinguished from a tool in that the moving power of the former is not communicated to it immediately by the human body, which only directs it; while the latter serves as a species of equipment, or as a better substitute for some member of man’s body.(273) To be of advantage, these three kinds of capital must save more labor or fatigue than it has cost to produce them. Tools are, however, older than machines. The aborigines of Australia used only a lance and a club in hunting; the somewhat more civilized American Indians, the bow and arrow; Europeans use firearms: in all of which a gradual progress is observable. Of the blind forces which communicate motion to machines, water was the first used, then the wind, and last of all, steam.(274)

D. Useful and laboring animals, in so far as they are raised, fed and developed by human care.

E. Materials for transformation (Verwandlungsstoffe): either the principal material which constitutes the essential substance of a new product, the yarn of the weaver for instance, the raw wool, silk or cotton of the spinner; or the secondary material which, indeed, enters into the work, but only for purposes of ornamentation, as gold-leaf, lac, colors etc.

F. Auxiliary substances, which are consumed in production, but do not constitute a visible part of the raw product,(275) as coal in a smithy, powder in the chase or in mining, muriatic acid, in the preparation of gelatin, chlorine in bleaching etc.

G. Means of subsistence for the producers, which are advanced to them until production is complete.

H. Commercial stock, which the merchant keeps always on hand to meet the wants of his customers.

I. Money as the principal tool in every trade that is made.

K. There is also what may be called incorporeal capital (quasi-capital according to Schmitthenner), which is as much the result of production as any other capital, and is used in production, but which, for the most part, is not exhausted by use. There are species of this kind of capital which may be transferred, as for instance, the good will of a well-established firm. Others are as inseparably connected with human capacity for labor as soil-improvements with a piece of land; e.g., the greater dexterity acquired by a workman through scientific study, or the greater confidence he has acquired by long trial.(276) The state itself is the most important incorporeal capital of every nation, since it is clearly indispensable, at least indirectly, to economic production.(277)

The greater portion of the national capital is in a state of constant transformation. It is being continually destroyed and reproduced. But from the stand-point of private economy, as well as from that of the whole people, we say that capital is preserved, increased or diminished according as its value is preserved, increased or diminished.(278) Pretium succedit in locum roi et res in locum pretii. “The greater part in value of the wealth now existing in England, has been produced by human hands within the last twelve months. A very small proportion indeed of that large aggregate was in existence ten years ago; of the present productive capital of the country, scarcely any part except farm-houses and a few ships and machines; and even these would not, in most cases, have survived so long, if fresh labor had not been employed within that period in putting them into repair.... Capital is kept in existence from age to age like population, not by preservation, but by reproduction.” (J. S. Mill.)