ON THE NATURE AND FUNCTIONS OF CAPITAL. LECTURE I. ON CAPITAL. I PROPOSE in the present Lecture to treat of the nature and functions of Capital. There is scarcely any subject in political economy on which it is more essential to possess distinct and accurate conceptions; indeed, we shall find that the root of some of the most inveterate popular errors that prevail is to be found in a misapprehension or confusion of ideas with respect to capital. I shall refer, in passing, to some of these current fallacies, distributing my remarks under three principal heads, with a view to elucidate,-1st. What Capital is. 2nd. How it is formed. 3rd. How it is employed. Let us first endeavour clearly to ascertain what we mean by capital. To many minds, the notion that the term presents is that of money; but money, as we shall presently see more plainly, is but the representative of capital. The possessor B of a sum of money has the command of capital by the convertibility of the gold, silver, or other circulating medium which he holds, into any of those articles which he may desire to use as capital. But until so converted, the circulating medium is quite incapable of serving that purpose which constitutes the proper function of capital, viz., the production of wealth. It is with reference to this, its special characteristic, that I would define capital as consisting in those articles of wealth which are employed in the reproduction of wealth. The constituents of all production are correctly described by the highest economical authorities as three, viz., Natural Agents, Labour, and Capital. The earth, including in that term all the powers of the material universe, is the original source of production. Labour is the instrument by which commodities useful to man are extracted from that source; but there is still a third agent, without which labour is comparatively impotent. Set a man with the full use of his physical and mental powers down in an uncultivated island, and, however great its natural fertility might be, he would scarcely be able to maintain his own existence, much less to accumulate any surplus after supplying his immediate wants. He would have neither seed to sow, nor implements of any kind to till the ground; nor tamed animals to assist him with their strength or speed; nor even, if he had the means of cultivating the earth, would he have any store of provisions to sustain his life until the produce arrived at maturity. In one word, he would have no capital. But, provide the same man, like Robinson Crusoe, with some waifs from the wreck from which he has been cast ashore, such as carpenters' tools, fire-arms and ammunition, a supply of bread, biscuit, spirits, flour and corn for seed, a quantity of clothes, and similar articles of prime necessity ;--furnish him with these requisites, and he will have a capital, by means of which he will be enabled, not only to maintain himself till his industry can produce a new stock of necessaries, but to make continually fresh additions to his stores, and, finally, to become, like Defoe's hero, when he left his island, the owner of a considerable stock of valuable property. One thing alone saved from the vessel, though identified almost indissolubly in our minds with associations of value, was found utterly worthless to the shipwrecked mariner, a purse of money;-a clear illustration of the fact, that where, from the absence of society, there can be no exchange, that commodity which is only the representative of value for the purposes of exchange, becomes wholly valueless; it is of no use whatever for purposes of production,-in other words, it is not capital. -a The articles, then, of which capital does consist are articles previously produced by the co-operation of the three agents already specified, and accumulated for the purpose of being used in reproducing something else. All production is, in fact, carried on by the consumption of what has been produced before. Every labourer subsists on the produce of past labour: the last year's crop furnishes his subsistence while he is preparing the ground to yield a new harvest; the produce of the next season will be raised from the reserved produce of the present. As the labour precedes the harvest, so there must be a fund in hand to sustain the labourer until the harvest. In other words, there must be an accumulated fund, or a capital, in existence, as a condition precedent to all production. Anything whatever, the result of previous labour, which is used in the work of production, falls within the description of capital. The principal elements of which it consists are three, -Raw Materials, Implements, Provisions for the labourers employed. In agricultural industry, the seed, the plough, and the ploughman's wages, may stand for the representatives of these three classes of capital. Whether the ploughman be lodged and boarded by the farmer, or the farmer, at the end of the week, put a sum of money into his hand, to be exchanged by himself for food, lodging, and clothing, obviously makes no difference whatever in principle. It is the money's worth that is the capital or instrument of production, not the money, which is merely its sign or token. The second class, which I have termed "implements," must be extended, in an advanced state of industrial improvement, to include a great variety of products,—machinery, buildings, ships, railways, &c., as well as animals reclaimed and made auxiliary to human labour. The description of those things which are or may be capital will enable us to determine clearly what are not capital. Upon this point strange misconceptions have been entertained and propounded, even by men of ability and eminence, who have engaged in the discussion of economical subjects. Professor Hancock, of Trinity College, Dublin, some time |