The Positive Theory of Capital

CHAPTER VI

POSSIBLE OBJECTIONS

IT is perhaps advisable to supplement our positive statement by a brief critical consideration of the most important objections that might be urged. Two of these appear to me particularly worth noticing. The first is, that the majority of goods which constitute capital are, by nature, quite unfitted to immediate consumption. There is, therefore, no sacrifice in withdrawing them from a use which they could never serve. Indeed, it is ridiculous to speak of the “non-consumption” of steam-engines and land improvements, of roofing tiles and bars of metal, as an act of saving or abstinence.1

To me this seems a somewhat cheap, but still perfectly good, argument against those who formulate the theory of saving superficially or falsely. But, as against the essence of the theory, it proves nothing. If any one is stupid enough to interpret the theory of saving as meaning that finished capital, in its form as concrete capital, must be “saved,” he must submit to the retort that man cannot eat iron machines.2 But this is not at all the meaning of any thoughtful representative of the theory. What is maintained is only that, without saving, capital cannot be made or increased; that saving is as indispensable a condition of the formation of capital as is labour. And this is literally correct. The machines themselves have not been saved, but built. But in order to build them, men had previously to withdraw the productive powers necessary to building them from the service of the present; they had, therefore, in the strictest sense of the term, to save them.3

It may serve towards the settling of this controversy to remark that the idea of sacrifice, of renunciation, and thus of moral desert, need not be associated with the conception of saving.4 There may be sacrifice in saving, and it may be praiseworthy, but not at all necessarily. A man with a small income will, of course, feel it a sensible privation, and it will require strong self-denial in him to lay past anything; while one who has an income of £100,000, and is content to consume one half of it, has little claim to be considered a hero of asceticism because he saves the other half as capital. It is simply the fact of a saving that is indispensable to the formation of capital; whether there is sacrifice and moral desert in it or not is all the same to the result. And it follows from this that the theoretical truth, that “saving” is necessary to the formation of capital, cannot and must not be used to justify, either morally or socio-politically, all and every taking of interest. This is another instance of that confusing of the theoretical with the socio-political problem of interest which I adverted to in another place5 as having done so much harm. One side mixed up the theoretical doctrine that the formation of capital must be preceded by saving, with the moral judgment that interest is justified as the “reward of abstinence,” and the other side, which saw, quite correctly, that interest could not be justified in such general terms, was misled, by the same confusion of the problems, into denying not only the false socio-political deduction but the true theoretical premiss.

If these two problems are kept distinct it will help us to give both parties their due. To Rodbertus and Lassalle we may grant at once that saving need not be moral heroism, and therefore is no sufficient socio-political justification of interest; but we must stand for the recognition of the theoretical truth that the fact of saving is in any case required to the formation of capital.

A second objection lays emphasis on the fact that, for a man to be able to accumulate capital, he must acquire more than he uses, and draws the conclusion that it is essentially the productivity of labour—industriousness and not abstinence—to which the formation of capital is due. Thus Rodbertus says, in so many words, that if, in the beginnings of economic development, an “isolated worker has no time to make a tool because he must always live from hand to mouth,” the blame lies simply in the productivity of labour being too small. If, later, this productivity increases so much that, say, eight hours’ labour is sufficient to produce the day’s maintenance, then “from the labour time, which up till now he had to devote entirely to make what was absolutely necessary, he has a portion over for other labour, and it is this spare labour which he is now able to devote to the making of a tool.” And from this quite correct consideration Rodbertus draws the conclusion that it is only the increasing of the productivity of labour, and not saving, which makes the existence of such a primary capital possible.6 And still more briefly and strongly does Kleinwächter give expression to the same idea when he says:” He who transfers a portion, say a half, of his revenue to the bank is merely industrious. He might, for instance, by a five hours’ day of labour earn his bare maintenance, and devote, say, every afternoon to his recreation or enjoyment; instead of which the man works ten hours a day, and regularly carries what he earns in the afternoon to the savings-bank.”7

I think this objection is very easily met. It is simply not correct to say that the man is “merely industrious.” He is industrious and saving. If he were simply industrious he would, every day, spend the produce of the afternoon’s labour, along with the produce of the forenoon’s labour, in immediate enjoyment of life. That he does not do so is because he is saving as well. I freely admit that greater industriousness, causing a return far exceeding necessary requirements, and, similarly, greater productivity of labour, very much facilitate saving, just as I admit also that, without acquisition, saving, as well as formation of capital, is absolutely impossible. But I must as emphatically claim recognition of the fact that the greatest acquisition could not lead to the formation of capital if a portion of it were not withdrawn from present use and “saved.” Production and Saving form two equally indispensable conditions of the formation of capital, and it is only dialectical one-sidedness—which, unfortunately, has already played much too great a part in the doctrine of capital—that could deny the co-operation of either of them.8

But does not this involve me in contradiction with the proposition so earnestly contended for in last chapter, that all goods (and consequently all capital) proceed from wo elements, of which saving is not one, viz. from nature and labour?9 Certainly it does not. It is not my intention to do as Senior did,10 and try to make Saving a third factor in production along with Nature and Labour. It does not stand beside these factors, but behind them. It does not share with them in the work of production in such a way that any part of the same is due to it solely and peculiarly; it only effects that the productive powers, nature and labour, which in any case must do the whole work of production, are directed straight to this and no other goal—the production of capital and not of consumption goods. In a word, it has its place, not among the means of production, but among the motives of production—the motives which decide the direction of production. The proposition, then, that nature and labour are the only true productive powers, can stand perfectly well beside the wider assertion, that, if capital is to come into existence at all, there must, first, be certain intellectual dispositions through which renunciation is made of a portion of the immediate consumption that is otherwise possible; in other words, there must be “Saving.”

Saving, it is objected again, is a “non-consumption”—something purely negative; and a pure negation can bring forth nothing.11 To my mind there is more dialectic than truth in this argument. Is it quite correct to say that saving is something purely negative? How comes it, then, that, although nothing is easier than a “pure not-doing,” so many people feel saving an uncommonly difficult and disagreeable thing? In truth, saving is a mental business; and often, indeed, though not always, a very troublesome mental business, preceded by long deliberation and conflict between contending motives. This, of course, does not constitute an act of production, and the representatives of the above dialectical objection are, in the end, quite right in raising it as an argument against those theorists who would dignify saving by the name of a third factor in production. But, indeed, simply mental as saving may be, it is sufficient to effectually fill the role which we have assigned to it in the formation of capital, viz. exerting an influence on the direction of production.

For the rest, whether it be a “pure negation” or not, we can, in no case, allow dialectical considerations to interfere with establishing important scientific facts. And it is an important scientific fact, which must be reiterated all the more emphatically that it has been disputed, that the progress of capital stands in a causal relation with the extension of the immediate claims put forward by individuals and peoples. Whatever body—be it an individual or a people—extends the claims of the moment so far as to exhaust, during the current period, the entire amount of consumption goods which its income makes possible for the current period, can neither make new nor increase old capital; and this fact finds accurate and straightforward expression in the proposition that saving is an indispensable condition of the formation of capital.12

Suppose now that we have succeeded, after considerable rouble, in establishing the proposition that capital comes into existence through saving and devotion to production of what is saved, we have still got but half the answer to our inquiry as to the formation of capital. We have now to face the further question: On what does it depend that people can, will, and actually do save and produce intermediate products? Strictly speaking, this second question is the more important of the two; it points to the impelling and working forces in the formation of capital, while all that has preceded has merely laid down the external forms of the process.

The most general answer, but still, it must be confessed, insufficient for all its generality, runs thus: what people look to in economic life is the Value of goods. Here we touch a subject which is too important and too difficult to be spoken of merely in passing. To obtain the basis for the principal part of our work—the explanation of interest—we require to go into the theory of value. I shall, therefore, leave the theory of the formation of capital at this stage, returning to it shortly in the last chapter, where we shall give it the logical conclusion that it still lacks.

13 This is very strongly put by the Socialist writers, as, e.g., Lassalle (Kapital und Arbeit, p. 69); Rodbertus (Das Kapital, p. 271). In a somewhat diluted form the same doctrine appears in Wagner (Grundlegung, second edition, p. 600), who makes a distinction between goods in which the peculiarities of capital are inherent, and those in which they are not. The former are not, at least “directly,” objects of saving. Similarly Kleinwächter (Schönberg’s Sandbuch, first edition, p. 173).

14 Lassalle.

15 In the second edition of Schönberg’s Sandbuch (p. 214) Kleinwächter comes a long way nearer oar conception in assenting to it, as regards at least one of the chief forms of capital—tools of production. He allows that the making of such tools “always involves, to a certain extent, the renunciation of an immediate enjoyment,” because the materials which are made use of in making the tools of production might have been employed in making some kind of consumption goods; and thus there is no reason for objecting to call such a renunciation of enjoyment by the name of Saving. But it is different, he says, with the materials of production. Such things as raw wool, stone, and lime, etc., could not in any way be objects of direct consumption, and so could not be saved; they must be looked on, therefore, economically as products of labour only, and not as the result of saving. In this Kleinwächter is not logical. As regards the tools of production he, quite correctly, does not consider whether the finished tools themselves might have been consumed, but whether, by the instruments from which the tools were made, any consumption good might have been made; and because this is the case he answers the question as to saving in the affirmative. But if he had kept to this line of thought as regards the materials of production, he must have seen that, by means of the same productive powers as man uses to quarry stone, to build a house, or obtain lime for mortar, he might have made himself goods for immediate consumption,—e.g. hunted wild animals or caught fish,—and that here, consequently, on exactly the same grounds and in exactly the same way as in the case of tools, saving does come into the question.

16 See above, p. 102.

17 See Capital and Interest, p. 3.

18 Das Kapital, p. 242.

19 Kleinwächter, in Schönberg’s Handbuch, second edition, p. 215.

20 A very striking illustration of these words may be found in the already-mentioned utterances of Bodbertus on the subject. On p. 242, from the fact that, if the productivity of capital is too small, there can be no saving and no formation of capital, he contents himself with drawing the quite correct conclusion that “necessarily some other element besides saving must intervene.” Thus he ascribes to saving its proper place, as not sufficient by itself, but, all the same, as a factor of the formation of capital. It is only on p. 243 that the fact of a certain degree of productivity of labour being indispensable is dialectically changed into the statement that only the increase of productivity, and not saving, makes the formation of capital possible.

21 A similar objection was urged by the old economist Lauderdale against the Saving theory, Inquiry, pp. 207, 272.

22 Political Economy, third edition, p. 57, where three great agents or instruments of production are distinguished—Labour, Natural Agents, and Abstinence.

23 Marx, Das Kapital, second edition, i. p. 619, in note (English translation, p. 608): “It has never occurred to the vulgar economist to make the simple reflection, that every human action may be viewed as ‘abstinence’ from its opposite. Eating is abstinence from fasting, walking abstinence from standing still, working abstinence from idling, idling abstinence from working, etc. These gentlemen would do well to ponder, once in a way, over Spinoza’s Deter-minano est Negatio.” Gide, Principes d’Éc. Pol. p. 168: “Un act purement négatif, une abstention ne saurait produire quoi que ce soit…. Sans doute on peut dire que si ces richesses avaient été consommées au fur, et à mésure qu’elles ont pris naissance, elles n’éxisteraient pas à cette heure, et qu’en consequence l’épargne les a fait naitre une seconde fois. Mais à ce eompte, il faudrait dire qu’on produit une chose toutes les fois qn’on s’abstient d’y toucher et la non destruction devrait ètre classée panni les causes de la production, ce qui serait une singulière logique.”

24 I will not, a priori, deny that possibly one might contrive to hunt up some subtle examples where capital (particularly social capital) comes into existence without saving properly so called. But all the more strongly do I hold by my proposition that, as regards the great mass of the economic formation of capital, saving, in the way I have indicated, has its place.

• 1See my Capital and Interest, 1890, p. 111.
• 2The English word “Cattle,” as Knies (p. 7) has rightly remarked, has nothing in common derivatively with our conception.
• 3P. 219 (German edition, p. 266). See also my Hechte und Verhältnisse, p. 51. Innsbruck, 1881.
• 4Cossa [La Nozione del Capitale), Saggi di Ee. Pol., p. 157, has the definition: “Capitale è un prodotto impiegato nella produzione.” Ricca-Salerno (Sulla Teoria del Capitale, 1877, p. 51) says: “Il capitale è ricchezza prodotta applicata alla produzione.” Rodbertus, whose opinion I am inclined to put particularly high, because, although not altogether happy in his solution of the problems of capital, he had an insight into its essence such as scarcely any one before him had, explains (Das Kapital, p. 234, also Zur Beleuchtung der soz. Frage, p. 98) that “Capital (materials and tools) is product which serves for still further production.” A. Wagner, also, who has done good service in the theory of capital (Grundlegung, second edition, p. 38), calls capital a “Stock of economical goods, which serve as instruments to the making or acquiring of new economical goods.” In the most recent Italian monograph on capital, Supino (Il Capitale nell’ Organismo Economico e nell’ Economia Politica, 1886, pp. 9 and 17) defines capital again as “Il prodotto del lavoro passato che serve a produzione successiva,” or as “ricchezza impiegata produttivamente allo scopo di ricavarne un profitto.” Of other prominent modem writers may be mentioned Pierson (Leerboek der Staathuishoudkunde, Haarlem, 1884, p. 157); Schönberg (Handbuch, second edition, p. 209), “Capital is a material means of production, obtained by human labour, which, employed as such, is destined to give a return to its owner”; E. Sax (Grundlegung der theoretischen Staatswirth-schaft, pp. 115, 315, 323, etc.) Of recent French writers on the subject Gide (Principes d’Économie Politique, Paris, 1884) recognises the two varieties in the conception of capital with a clearness rare even in French literature, and distinguishes them as “capitaux simplement lucratifs” and “capitaux productifs.” “Les premiers,” he says, “sont ceux que rapportent un revenu á une personne; les seconds sont ceux qui prodnisent one richesse nouvelle dans le pays” (p. 148). His only failure is that he would recognise productive capitals alone as “true” capitals.In English literature our conception of capital (without, of course, any clear distinction being kept between its two varieties) is almost exclusively the prevailing one; this is so well known that I may spare quotations. Generally speaking, it is very significant of the state of “public opinion” in the matter that not long ago Kleinwächter (Schönberg’s Handbuch, second edition, p. 210) could explain “Common usage in political economy to-day considers it an essential characteristic of capital that it is a material means of production.” The only difference of opinion is as to whether land should be reckoned as capital or not. Finally, I think I may ventare to express the opinion that even the fore-most representative of a rival definition, Knies, is in opposition to us more in form than in matter. It is he at any rate who has, in a masterly manner, developed the idea—the really important one in our statement of the conception—that, in defining capital, we must define that which is the object of those problems that “have appeared on the scene under the name of capital” (Das Odd, p. 19).
• 5See Mill’s Principles, i. 1. 2.
• 6Das Geld, pp. 83 and 92.
• 7If we were to carry our analysis of what man does in production a step further, we might appropriately distinguish three fundamental ways in which the producing man “moves things.” The first is what, for want of a better name, we may call simple movements or changes of place—where men transport entire objects from one locality to another. Thus the miner brings the ore from the depths of the shaft to the upper air; the merchant takes his goods from the place where they are produced to the place where they are demanded and used. The second embraces those movements of parts of one and the same object whereby it experiences a change of form, as when nails are made from iron, statues from marble, pipes from clay, dials from ivory, combs from caoutchouc, tumblers from glass, furniture from wood. The third, and much the most common way, is where different objects are brought together in space to form combinations of matter. These combinations may be merely temporary, or they may be lasting. Instances of the one are where the stamp falls on the coin, the chisel chips at the marble, the carving tool is applied to the wood, the ore put into the furnace, the yarn into the loom, the paper under the printing press, the stuff under the shears, the plough through the clods. Instances of the other are where we build a house out of wood, stone, lime, iron, etc.; where we put together a watch out of wheels, springs, pendula, weights, stop-action and many other things; in fact in manufacture generally. I must warn the reader that this division into three fundamental forms neither has, nor is meant to have, the character of strict scientific classification. Indeed, these forms merge in many instances into one another. Temporary combinations, for instance, are very often half-way to changes of form, and what I have called a simple change of place is at the same time, in a certain point of view, a material combination, a bringing together of the thing moved and the object (personal or impersonal) to which it is moved. This division, however, will make it easier to find our reckoning, and will prove too, if necessary, the correctness of the general characteristics which I have ascribed in the text to productive processes. I mean to say that it is easy to see that every productive activity which one can think of ranges itself under some one of these three fundamental forms, and to that extent it is proved that such an activity must, a fortiori, range itself also under the general formula given in the text, where we have described the nature and method of the production of material goods as the mastery of natural powers by means of putting objects in motion.
• 8Book i. chap. vii. § i.
• 9A similar objection was urged by the old economist Lauderdale against the Saving theory, Inquiry, pp. 207, 272.
• 10Slaatswirthschafiliche Untersuchungen, Munich, 1832, p. 59, and similarly in the second edition of 1874, p. 111. On p. 56 he expressly calls capital “Wealth which brings in income.”
• 11Grundsätze, Vienna, 1871, p. 130.
• 12Grundlagen und Ziele dea sog. wissenschaftlichen Sozialismus, 1885, p. 184.
• 13When we are told that capital assists in the production of wealth, and then again that it assists in the obtaining of wealth for its owner, we are apt to jump to the conclusion that the two phenomena are intimately and essentially connected, and that the one is the immediate result of the other—that capital can bring wealth to its owner because capital assists in the production of wealth. As a fact, Political Economy has taken up this idea only too readily and too completely. Captivated by the deceptive symmetry that exists between the three great factors of production—Nature, Labour, Capital—and the three great branches of income—Rent, Wage, and Interest—the science, from Say’s day till the present, has taught that these three branches of income are nothing else than the payment for the three factors of production, and that Interest in particular is nothing else than the compensation which capital receives for its productive services when the product is divided out among society. Propounded by various interest theories in various forms this idea has found its most concise and, at the same time, its most naive expression, in the well-known “Productivity theories”—those theories which explain interest directly as the natural fruit of a productive power peculiar to and resident in capital.
• 14Originally the word Capital (Capitale from Caput) was used to signify the Principal of a money loan (Capitalis pars debiti) in opposition to the Interest. This usage; already foreshadowed in the Greek formation κεϕάλαιον, became firmly established in mediæval Latin, and appears to have remained the prevailing one for a very long time, even pretty far down in the new era. Here, therefore, Capital meant the same thing as “an interest-bearing sum of money.”
• 15The theory of the use of goods I have already gone into at length in Capital and Interest. I there showed that material goods are nothing else than such distinct forms of matter as admit of the natural powers residing in them being directed to human advantage. I showed how the “use” they afford is realised through concrete activities of these natural powers, and, therefore, by real forth putting of power. I showed how a use (Gebrauch or Nutzung) cannot be made of them otherwise than by taking the peculiar forms of the energy of the good at the proper moment, supplying the conditions necessary to render them available where they previously existed in an unavailable form, and then bringing these forms of energy into proper connection with that object in which the useful effect is to take place. On these considerations I based the conception of the “Material Services” (Nutzleistungen) which I believe to be the only one that corresponds with facts, and rejected certain shadowy ideas which connected the old theory of interest with the word “Uses” of goods. What remains for us here is, on the same lines, to lay down certain fundamental ideas as to the origin of material goods.
• 16Again, the solution suggested is the most conservative one. Without laying any particular weight on the fact that the historical origin of the word Capital indicates a relation to an acquisition or a gain, and that our reading remains true to this, it preserves the double relation—the relation to acquisition of interest on the one side, and to production on the other—which was imported into the conception of capital by Adam Smith, and since his time has been adopted in scientific usage. It is no inconsiderable advantage, then, that we do not require to create a majority in its favour by a revolution in terminology; the majority is already with us, and the conception may easily be carried unanimously if we add some new unbiassed members. Here, too, it is worthy of particular attention that those writers who have occupied themselves professedly and most profoundly with the investigation of the conception of capital and its problems, have ended, almost without exception, by adopting exactly the same conception, or at least one which comes very close to it.
• 17If we look more closely at the way in which man assists natural processes, we find that his sole but ample contribution consists in the moving of things. “Putting objects in motion” is the idea which gives the key to all human production and its results;—to all man’s mastery over nature and its powers. And this is so simply because the powers reside in the objects. Now when man by his physical powers—the power of moving things—is able to dictate where the object shall be, he obtains a control over the place at which a natural power may become effective; and this means broadly a control over the way and over the time in which it may become effective.
• 18Knies defines as capital “that complex of goods available to a community which may be applied to the satisfaction of want in the future.” This definition, as we can easily see, agrees almost word for word with that of another conspicuously important and fundamental conception. If we leave out the words “in the future,’ it takes in all the goods in a community available for the satisfaction of want, and that is an amount which most writers are in the habit of calling the “wealth” ( Vermögen) of the community. If, like Knies, we emphasise the fact that wealth embraces only the net amount of goods after deduction of debts, we may perhaps call that amount the community’s “gross property” (Guterbesitz). In any case we have in this to deal with an independent amount bearing an independent name, with which “capital” neither coincides nor should coincide.
• 19Again I say a control over the time in which a natural power may become effective. This proposition, also, must not be taken too literally. It must not be imagined that natural powers work intermittently; that man can sometimes bring them to a standstill, sometimes set them working again. On the contrary, natural powers are always at work; a natural power not active would be a contradiction in terms. But it is possible that several powers may be so combined that their activities may for a time mutually balance each other, and the resultant be rest—if not complete rest, still some movement so slight that, as regards human purposes, it may be neglected. When this is the case, before any new resultant can emerge that is of interest to man, there must be an entirely different combination of materials and powers. This suggests how man may get control of the point of time at which a definite resultant emerges. It is only necessary for him, by skilful use of his power to move objects, to provide the causes of the desired effect, all but one. So long as this one is not present the conditions are unfulfilled, and there cannot be the desired result. But when at the proper moment he adds the last condition, the movement hitherto held in leash, as it were, is suddenly set free, and the desired effect is obtained at the opportune time. Thus the sportsman moves powder and lead into the barrel of the gun; he shuts the breech; he raises the cock. Each of these things has for long possessed and expressed its peculiar powers. In the powder are present the molecular powers whose energy later on is to expel the shot from the barrel. The barrel now, as formerly, exerts its forces of cohesion and resistance. The trigger which is to let the cock smash down, strains and presses against the spring. Still the arrangement, the disposition of the collective powers, is such that the resultant of their mutual energies is rest. But the sportsman covers the wild fowl with the barrel: there is a slight pressure on the tongue, a little dislocation of the arrangements, and the shot flies.
• 20Facts certainly spoke with perfect distinctness. It was impossible to deny that capital is no element in the proper sense of the word, inasmuch as it itself springs from the co-operation of nature and labour. Not only so, but by a singular irony of fate this had to be expressly proved—as it had been by Adam Smith before them—by those very theorists who maintained its independent productivity. In their theory of price, in having to show how all prices resolve themselves finally into rent, wage, and interest, they were forced to demonstrate in the most minute way that concrete capital is not an element; that, for instance, copper and steel, which serve as capital in the manufacture of watches, originate in the co-operation of the natural mineral deposits, of the work of miners, and of older capitals, which themselves have orignated in similar ways, and so on. In the face of this, to maintain the independent productivity of what they had just demonstrated to be a dependent and intermediate product, they were driven to adopt very singular expedients. The favourite ones were obscurity and brevity. Instead of making an earnest effort to bridge the yawning contradiction, they either did not suggest the doubt at all, or, if a doubt had already been raised, they dismissed it with some laconic phrase or other. A long series of writers make no scruple about expounding capital on one page as a factor of production “derived” from nature and labour, and on the next as a third independent factor of production along with nature and labour. Mill has so far yielded to the pressure of facts as to admit that capital is itself the product of labour, and that its instrumentality in production is therefore in reality that of labour in an indirect shape. But with a quick turn he saves its independence. “Not the less,” he continues,” does it require to be specified separately. A previous application of labour to produce the capital required for consumption during the work is no less essential than the application of labour to the work itself.” Therefore, because labour must be applied twice, in two different stages of production, something else besides labour must be recognised as the independent condition of production!
• 21But does not this involve me in contradiction with the proposition so earnestly contended for in last chapter, that all goods (and consequently all capital) proceed from wo elements, of which saving is not one, viz. from nature and labour? Certainly it does not. It is not my intention to do as Senior did, and try to make Saving a third factor in production along with Nature and Labour. It does not stand beside these factors, but behind them. It does not share with them in the work of production in such a way that any part of the same is due to it solely and peculiarly; it only effects that the productive powers, nature and labour, which in any case must do the whole work of production, are directed straight to this and no other goal—the production of capital and not of consumption goods. In a word, it has its place, not among the means of production, but among the motives of production—the motives which decide the direction of production. The proposition, then, that nature and labour are the only true productive powers, can stand perfectly well beside the wider assertion, that, if capital is to come into existence at all, there must, first, be certain intellectual dispositions through which renunciation is made of a portion of the immediate consumption that is otherwise possible; in other words, there must be “Saving.”
• 22The variation which Hermann, however, has given must be considered an independent one, and is the fourth reading in arithmetical order given to the conception. He goes back to capital as the source of income, and makes this the object of his definition: Capital, he says, is “every durable foundation of a utility (Nutzung) which has exchange value.” In opposition to the last definition this one includes under the conception of Capital all land, and besides embraces such consumption goods as are durable, like furniture, houses, etc., even if they are personally used by the owners.
• 23A fifth variation is given by Menger. He defines capital as such groups of economic goods of higher rank (productive goods) as are now available to us for future periods. This definition is, in one way narrower, in another, wider than Hermann’s. It excludes durable consumption -goods (“goods of the first rank ”), but it is wide enough to take in the productive services of labour, which Hermann had not reckoned as capital.
• 24A sixth variation comes from Kleinwächter. He finds it a characteristic mark of capital that it lightens the toil of acquisition or productive labour. Now this characteristic appears to him not to belong to all means of production, but only to one category of these, the tools of production, while the matter or materials of production are absolutely passive during the whole production process; they are worked up or used up but give no assistance in working. “Logically,” therefore, “the conception of capital should be limited to tools of production.”