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Sanity Cap

capital, pro, production, products, distinction, economy and country

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CAP is a term used in com merce to express the stock of the mer chant, manufacturer, or trader, used in carrying on his business, in the purchase or manufacture of commodities, and in the payment of the wages of labour ; and is understood not only of money, but of buildings, machinery, and all other mate rial objects which facilitate his operations in trade. The term itself and the prac tical qualities and uses of capital are sufficiently understood. in this its com mercial sense ; but it is the object of the present article to treat of capital in a more extended form, as within the pro vince of political economy, and embracing not only the capital of particular indivi duals, but the entire capital of a country. In this latter sense, capital may be de fined as the products of industry possessed by the community, and still available for use only, or for further production.

To consider capital in all its relations to the material interests of man, to the increase of population, the employment and wages of labourers, to profits and rent, it would be necessary to travel over the entire range of political economy ; but this article will be confined to the follow ing points .—I. The origin and growth of eapital. II. Its application and uses.

I. Capital is first called into existence by the natural foresight of man, who even in a savage state discerns the advantage of not immediately consuming the whole produce of his exertions in present grati fication, and stores up a part for his future subsistence. The greater proportion of mankind possess this quality, and those who do not possess it are admonished of its value by privation. In civilized life there are many concurrent inducements to accumulate savings ; of which the most general are—the anxiety of men to pro vide for their families and for themselves in old age ; social emulation, or their de sire to substitute the manual labour of others for their own, and of advancing themselves from one grade to another in society ; and a love of ease and luxury, which can only be purchased by present sacrifices.

A desire to accumulate some portion of the produce of industry being thus na tural to mankind and nearly universal, the growth of capital may be expected wherever the means of accumulation exist ; or, in other words, wherever men are not obliged to consume the whole pro ducts of their labour in their own subsist ence. From the moment at which a

man produces more than he consumes, he is creating a capital ; and the accumulated surplus of production over the consump tion of the whole community is the capital of a country.

Thus far the origin and growth of capital are perfectly intelligible ; but in order to understated completely the pro gress of accumulation, it will be necessary to advert to certain matters which inter- I fere with its apparent simplicity. As yet no distinction has been noticed, either ID the original definition of capital or in the succeedingexplanation of its causes, be tween those parts of the products of la bour which are reserved for the repro duction of other commodities, and those parts which are intended solely for use or consumption. These two classes of products have been divided by Adam Smith and others into capital and re venue ; by which division all products are excluded from the definition of ca pital unless they be designed for aiding in further production. The impropriety of this distinction, however, has been pointed out by Mr. M'Culloch (' Princi ples of Political Economy,' p. 97), and it does not appear that any such division of the stock of a country is founded on a proper distinction. How can its fu ture application be predicated ? The fund exists, and so long as it is not sent abroad or consumed it must be regarded as capital. The whole of it may be made available for thrther pro duction, or the whole may be consumed in present enjoyment; but no part is separable from the rest by an arbitrary classification. A man may choose, here after, to spend all his savings in drinking spirits and frequenting the theatres ; or he may carefully lay them aside for the employment of a labourer in some pro fitable work : but in either case the stock has the same capacity for production while in the possession of the owner.

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