Human capital

“ Here there is plainly a case where capital—the party of brains and wealth—the head of the industrial association, should lead off in a systematic effort and renew, as far as may be, the old human tie, for which no substitute has ever been devised.
To conciliate the interests of the classes, and identify labor with capital, individual employers must re-establish personal relationships between themselves and their men. ”

“ Thus social capital and its counterpart, the whole of social surplus value, are not merely real quantities, having an objective existence, but, what is more, the relation between them, the average profit, guides and directs the whole process of exchange. ”

“ The remaining portion of value, embodied in the total use-form of fixed capital, is of decisive importance for production as a labour process, but does not exist for the annual reproduction of society as a process of value-formation. ”

“ And so, if I use my own capital in directly aiding production, as by machinery, or in indirectly aiding production, in exchange, I receive a special and distinguishable advantage from the reproductive character of capital, which is as real, though perhaps not as clear, as though I had lent my capital to another and he had paid me interest. ”

“ We have seen that capital does not advance wages or subsist labourers, but that its functions are to assist labour in production with tools, seed, etc., and with the wealth required to carry on exchanges. ”

“ Values to-day permit their holders either to purchase means of production and of profit or their products. In the transformed society, when the private capital of production and exploitation shall have been made social, when the social community shall have placed the means of production at the disposition of associated laborers, the indemnity values which shall have been given the capitalists of yesterday will permit them no longer to buy the means of production, of rent, and of profit: they will permit them to buy only the products of the transformed social activity. ”

“ Therefore in the accumulation of wealth, so far as it arises from the saving by anyone of the products of his labour, from his bequest of this capital to another who farther adds to it by saving some of the profit which the capital yields, as employed in the payment for labour or in trade either by the capitalist himself or someone to whom he lends it, and from the continuation of this process through generations, there is nothing which tends to lessen for anyone else the possibilities of ownership. ”

“ Hence, if we define capital as wealth in course of exchange, understanding exchange to include not merely the passing from hand to hand, but also such transmutations as occur when the reproductive or transforming forces of nature are utilized for the increase of wealth, we shall, I think, comprehend all the things that the general idea of capital properly includes, and shut out all it does not. Under this definition, it seems to me, for instance, will fall all such tools as are really capital. ”

“ I do not mean to deny that the capital, or part of it, may be so employed as not to support laborers, being fixed in machinery, buildings, improvement of land, and the like. In any large increase of capital a considerable portion will generally be thus employed, and will only co-operate with laborers, not maintain them. ”

“ What capital does for production is, to afford the shelter, protection, tools, and materials which the work requires, and to feed and otherwise maintain the laborers during the process. These are the services which present labor requires from past, and from the produce of past, labor. Whatever things are destined for this use—destined to supply productive labor with these various prerequisites—are Capital. ”

“ Let us now take these questions up again, and examine them more minutely, and we shall find that interest is justified from a practical point of view by the fact that the enjoyment of capital by this particular means is not only the sole manner of enjoying it which is consistent with the general welfare, but also constitutes the advantage which, in the eyes of most great producers, gives to capital the larger part of its value, and renders the desire of producing it efficient as a social motive. ”

“ Ability, using wage-capital as its implement of direction, gives rise to fixed capital, in the form of the elaborate implements of modern production, which are the material embodiments of the knowledge, ingenuity, and energy of the highest minds. ”

“ In these pursuits are the true sources of wealth, and we have as much capital in these, mountains to begin with as any people in the world, according to the number of our community. Real capital consists in knowledge and physical strength. If we know how to apply our labor, it will produce for us everything we can ask for ”

“ The use of capital in production is, therefore, but a mode of labor. As capital can be used only by being consumed, its use is the expenditure of labor, and for the maintenance of capital, its production by labor must be commensurate with its consumption in aid of labor. Hence the principle that, under circumstances which permit free competition, operates to bring wages to a common standard199 and profits to a substantial equality—the principle that men will seek to gratify their desires with the least exertion—operates to establish and maintain this equilibrium between wages and interest. ”

“ And, as has been previously shown, food, clothing, etc.—in short, all articles of wealth—are only capital so long as they remain in the possession of those who propose, not to consume, but to exchange them for other commodities or for productive services, and cease to be capital when they pass into the possession of those who will consume them ”

“ Living and making their observations in a state of society in which a capitalist generally rents land and hires labor, and thus seems to be the undertaker or first mover in production, the great cultivators of the science have been led to look upon capital as the prime factor in production, land as its instrument, and labor as its agent or tool. ”

“ Thus we see how the different kinds of wealth successively come into being and become distinct. One part of the wealth accumulated by society is devoted by every one who possesses it to render labour more profitable by slow consumption, and make the blind forces of nature execute the work of man; this part is called fixed capital and comprises reclaiming, irrigation, factories, the tools of trade, and mechanical contrivances of every description. ”

“ Any analysis will show that much of the profits which are, in common thought, confounded with interest are in reality due, not to the power of capital, but to the power of concentrated capital, or of concentrated capital194 acting upon bad social adjustments. ”

“ Hence it necessarily results that, as has been forcibly expressed, "the additional capital, whenever it is productively employed, will tend as certainly to the benefit of the working population at large as if the owner were a trustee for their benefit." ”

“ These factors are the vendible items that men handle in these processes of production and distribution; and economic laws come, therefore, to be expressions of the algebraic relations subsisting between the various elements of wealth and investment,—capital, labor, land, supply and demand of one and the other, profits, interest, wages. Even such items as credit and population become dissociated from the personal factor, and figure in the computation as elemental factors acting and reacting though a permutation of values over the heads of the good people whose welfare they are working out. ”

“ The capital which, as we have seen, is the condition of all welfare on earth, the fortification of existence, and the means of growth, is an object of cupidity. Some want to get it without paying the price of industry and economy. ”

“ Are we maintaining a reason- able equation in our balance of payments? Does a reason- able percentage of the national income go to the formation of capital and is that capital being invested in productive enterprises? ”

“ In each of these three modes of production capital may aid labor—or, to speak more precisely, in the first mode capital may aid labor, but is not absolutely necessary; in the others capital must aid labor, or is necessary.
Now, while by adapting capital in proper forms we may increase the effective power of labor to impress upon matter the character of wealth, as when we adapt wood and iron to the form and use of a plane ”

“ There are, in this country, I think, at least twenty-five millions of persons, male and female, sixteen years old, and upwards, mentally and physically capable of running machinery, producing wealth, and supplying their own needs for an independent and comfortable subsistence.
To make their industry most effective, and to enable them, individually, to put into their own pockets as large a portion as possible of their own earnings, they need, on an average, one thousand dollars each of money capital. ”

“ Thus we must exclude from the category of capital everything that may be included either as land or labor. Doing so, there remain only things which are neither land nor labor, but which have resulted from the union of these two original factors of production. Nothing can be properly capital that does not consist of these—that is to say, nothing can be capital that is not wealth. ”

“ But—is not capital as necessary as labour? Can labour produce anything without capital? There must be raw material, there must be tools, there must be machines, there must be workshops, warehouses, and so forth; there must be soil to be tilled, &c. What can mere labour do without all these? But labour existed before capital, and made the tools, workshops, &c. Is it necessary that capital, now the foundation of successful labour, which has been produced by labour, should be owned by a few individuals? Has this minority a right to continue to take the best part of what labour produces? ”

“ Of course; but still capital was far a-head, though the population is gaining upon it every year. When the people first went, they found nothing but capital—all means of production and no consumers but themselves. ”

“ There must be land before labour can be exerted, and labour must be exerted before capital can be produced. Capital is a result of labour, and is used by labour to assist it in further production. Labour is the active and initial force, and labour is therefore the employer of capital. ”

“ Now, Sir, it is the effect of a well-regulated system of paper credit to break in upon this line thus dividing the many from the few, and to enable more or less of the more numerous class to pass over it, and to participate in the profits of capital by means of a safe and convenient substitute for capital; and thus to diffuse far more widely the general earnings, and therefore the general prosperity and happiness, of society. ”

“ To carry occasionally two or three passengers, a canoe is a better instrument than a steamboat; a few sacks of flour can be transported with less expenditure of labour by a pack horse than by a railway train; to put a great stock of goods into a crossroads store in the backwoods would be but to waste capital.
Generally speaking, no greater amount of wealth will be used as capital than is required by the machinery of production and exchange that, under all the existing conditions such as intelligence, habit, security and density of population, best suits the people. ”

“ You say that you think I have sometimes conceded that if population were miraculously stopped, while the most fertile land remained uncultivated, profits would fall upon the supposition of an increase of capital still going on. I concede it now. Profits I think depend on wages,—wages depend on demand and supply of labour, and on the cost of the necessaries on which wages are expended. ”

“ It is in this way that society mainly consists of two classes—the savers and the wasters, the provident and the improvident, the thrifty and the thriftless, the Haves and the Have-nots. The men who economize by means of labour become the owners of capital which sets other labour in motion. Capital accumulates in their hands, and they employ other labourers to work for them. ”

“ If all persons were to expend in personal indulgences all that they produce, and all the income they receive from what is produced by others, capital could not increase. All capital, with a trifling exception, was originally the result of saving. ”

“ Likewise, social changes, new needs, the growth of population, increase the net income of wealth, or the rents of a business. The basis of capital value is income, and whatever be its cause, political or economic, material income can and will be capitalized and added to the market value of the privilege, wealth, or industry on which the income is conditioned. ”

“ When, for instance, it is said that wages are drawn from capital, the word capital is understood in the same sense as when we speak of the scarcity or abundance, the increase or decrease, the destruction or increment, of capital—a commonly understood and definite sense which separates capital from the other factors of production, land and labor, and also separates it from like things used merely for gratification. ”

“ The tools and machinery of production are in all the most progressive countries evidently in excess of the use made of them, and any prospect of remunerative employment brings out more than the capital needed. ”

“ Instead, then, of the stagnation, both of industry and of benevolence, which would follow the universal and equable distribution of property, some men, by superior advantages of birth, or intellect, or patronage, come into possession of a great amount of capital. ”