ABSTRACT
Capital is a value-sum expressed in terms of money. Capital looks to the future and not to the past; the capital value embodied in a machine is not determined by what the machine cost nor by what its output has been, but by the expected future returns from it. Marginal desirability as an explanation of value is inseparable from scarcity. The entrepreneur knows that wages do not form his only cost of doing business. The entrepreneur spends money for labor, for agents created by labor, and for natural agents. But the theory tells us that cost determines value, and that the only cost is labor cost, therefore the money paid for the use of natural agents must be eliminated from cost. The labor-cost theory of price, requiring, as it does, capital to be defined as "stored-up labor," has been on the defensive from the moment it was first penned.
