11 Pages

Controversies Concerning the Theory of Capital.

It is admittedly difficult to determine where the line is to be drawn between capital and non-capital, indirect and direct productive forces. The human labour employed on land, and the resources of the land accumulated from earlier ages and employed for the same purpose (e.g. the work of beasts of burden in improving the land ; manure ; timber for roads ; agricultural and other buildings, etc.) are undoubtedly to be regarded as capital, when the measures and expenditures in question are taken in order to yield interest at a future date-as in the case of all other capital. Such improvements to the land often leave a permanent residual benefit. This happens, for example, in the case of major blasting operations to secure water in mountain regions, the building of roads, protective afforestation, etc. These new qualities which, once acquired, the land retains for all posterity, cannot of course be distinguished either physically or economically from the original powers of the soil; in the future they are to be regarded not as capital, but as land. Very much the same applies, moreover, to human skill: a manufacturer who enlists skilled foreign labour in order to introduce a new industry into the country makes a capital investment which may perhaps repay him to the full in a few years. But the skill in this industry, which perpetuates itself within the country, will be a future asset for labour and not for capital.