The function of productive capital is to aid in production. Except in the case of money, its value is not an aid in production, it is only a symptom of the aid which it is anticipated that it will render in production. In this re spect the value of a piece of land resembles the value of a piece of capital. It is not its value which makes the land productive; it is its productivity or its usefulness in production which gives it its value. Similarly it is the productivity of any piece of capital, or its use fulness in production, which gives it its value. In the case of that special kind of capital known as money, and in this case alone, its productivity, or its ability to aid in production, depends upon its value or its purchasing power. In all the other cases, it• is the various tools, machines, buildings and other bits of equip ment which perform the function of aiding in production. They derive their value from the fact that they perform that function. It is not the value which performs the function.
Capital is the combined result of labor per formed in the making of the things which con stitute it, and of the waiting which is neces sary to the performance of work long in ad vance of the maturing of a consumable product. The labor and the waiting may bosh be per formed by the same person, or by different persons. They are performed by the same per son when a man, say a farmer, makes his own plow, and then waits during the lifetime of the plow for the benefits in the form of income or the products of the plow. They are performed by different men' when the farmer buys the plow from a blacksmith, paying him cash. The blacksmith performed the labor of making it, but does not have to wait for its benefits, since he is already paid for his work. The farmer does the waiting, having surrendered present cash long before he receives the benefits in the form of larger crops year after year, from its possession. At the present time, in
our highly complicated industrial system, with its increase of specialization, the working and the waiting are generally performed by differ ent persons. Even the case of the plow made by a blacksmith and sold to a fanner, while a real case, is exceedingly simple as compared with the average process of capitalistic accu mulation. A modern plow factory is using machinery and equipment, that is, capital, which was made in other factories, and these, in turn, are using other capital made ih still other fac tories, and so on back to the mines, and there machinery is used which also can be traced back to other factories and other mines. But in all this complex system, those who labor will generally be paid wages as they go along, while others will do the investing, which means that they must spend considerable money in advance and get it back with an increase over a period of years. Thus the two functions of the laborer and the capitalist, or of -labor and capital as they are sometimes called, are pretty sharply separated.
Capital has existed, of course, as long as tools and equipment have existed, but this separation of the two functions has become general only since the rise of machine pro duction. Before that time, the function of the capitalist was not important enough to create an opportunity for many men. Not enough capital was needed in the more primitive forms of industry which preceded the present to enable any large number of men to live on its earnings. It is this fact which is probably meant when it is erroneously stated that capi tal in the modern sense came into existence with the rise of the factory system. Capital in the modern sense does not differ, except in its greater quantity and in the greater oppor tunity it gives to the capitalist, from capital in any other sense. See INCOME; NATIONAL