-'70 AGRICULTURAL ECONOMICS 



The socialists insist that capital is all wealth which serves to provide 

 its possessor with an income independent of his labor. We must 

 acknowledge that this definition harmonizes better with the general 

 idea of capital, i.e., that which furnishes an income, but it evidently 

 presupposes a specific economic and social organization, especially the 

 fact that wealth may be loaned at interest or may be employed to give 

 work to people who are glad to hire themselves out for wages. This 

 particular social organization is of quite recent origin. The ruin of 

 small industry and small farming, the expropriation of the masses, 

 and the creation of a permanent class of wage-workers all these 

 things had to be accomplished before capital acquired the power to 

 command the labor of others and to provide its owner with an income 

 not due to any work of his own, unless we regard as work the task of 

 watching over one's, possessions and collecting profits. Socialists 

 ridicule what might be called the naturalistic concept of capital, and 

 substitute for it the historical concept, which regards capital, not as 

 a permanent or necessary institution, but as the result of history. 



Now there is no necessary contradiction between these two 

 theories, since the one regards capital in its natural, permanent, 

 sociological characteristics, while the other considers its acquired, 

 relative, historical nature. Both may be true, and, in fact, each of 

 them contains part of the truth. It is certain that the part played 

 by capital has been modified by economic evolution. First it was 

 the simple tool of the manual laborer; later it gradually passed out of 

 his possession and came into that of the wealthy members of society. 

 Whereas it was at first simply an instrument of production it is now 

 often made an instrument of money-making and the means of obtain- 

 ing an income without working. This new state of society is what 

 the socialists call "capitalism." But although it may be admitted 

 that "capitalism" will some day disappear, capital will still remain. 



The definition given by the classical economists is therefore 

 better, precisely because it emphasizes those features of capital that 

 are essentially necessary, while the other definition points out only its 

 accidental and ephemeral characteristics. The fact that no wealth 

 can be produced without the help of pre-existing wealth is an economic 

 law whose importance cannot be exaggerated. It is necessary to give 

 a name to this pre-existing wealth, the function of which is so impor- 

 tant and so well defined. We shall call it "capital." 



Any object having value may become capital, provided certain 

 conditions are fulfilled. The idea of capital does not connote a cer- 

 tain class or kind of goods, but a certain condition or purpose of goods. 



