And now let us put this in a more general form. When two or more causes produce a given amount of wealth, and when the same causes with some other cause added to them produce a greater amount, the excess of the last amount over the first is produced by the added cause; or conversely, the added cause produces precisely that proportion of the total by which the total would be diminished if the added cause were withdrawn.
It is on this principle that the whole reasoning in the present book is based; and having seen how it enables us to discriminate between the amounts of wealth produced respectively by Human Exertion and Land, let us go on to see how it will enable us likewise to discriminate what is produced by Capital.
CHAPTER III
Of the Products of Machinery or Fixed Capital, as distinguished from the Products of Human Exertion.
◆1 To understand how much of the gross product is made by Capital, it will be well to turn from agriculture to manufactures;
◆2 As Capital plays in manufactures a more obvious part.
◆¹ Land, which in economics means everything that the earth produces and the areas it offers for habitation, is of course in a sense at the bottom of every industry. But if we wish to understand the case of Capital, it will be well to turn from agriculture to industry of another kind; the reason being that the part which Capital plays in agriculture is not only, comparatively speaking, small, but is also a part which, when we are first approaching the subject, is comparatively ill fitted for purposes of illustration. ◆² What is best fitted for the purpose of illustration is Capital applied to manufactures; and it is best at first not to consider all such Capital, but to confine our attention to one particular part of it. I must explain to the reader exactly what I mean.
◆1 Capital, when actually employed, is of two kinds:
◆2 Fixed Capital, such as plant and machinery; and Wage Capital.
◆3 The Capital embodied in machinery is what, for our present purpose, we must first consider.