But this phrase, like the corresponding phrase with regard to interest, assumes that the money value of the things which constitute his capital has been estimated: and such an estimate is often found to involve great difficulties.
When any particular thing, as a house, a piano, or a sewing machine is lent out, the payment for it is often called Rent.And economists may follow this practice without inconvenience when they are regarding the income from the point of view of the individual trader.But, as will be argued presently, the balance of advantage seems to lie in favour of reserving the term Rent for the income derived from the free gifts of nature, whenever the discussion of business affairs passes from the point of view of the individual to that of society at large.And for that reason, the term Quasirent will be used in the present volume for the income derived from machines and other appliances for production made by man.That is to say, any particular machine may yield an income which is of the nature of a rent, and which is sometimes called a Rent; though on the whole, there seems to be some advantage in calling it a Quasi-rent.But we cannot properly speak of the interest yielded by a machine.If we use the term "interest" at all, it must be in relation not to the machine itself, but to its money value.For instance if the work done by a machine which cost ?00 is wortb ? a year net, that machine is yielding a quasi-rent of ? which is equivalent to interest at four per cent.on its original cost: but if the machine is worth only ?0 now, it is yielding five per cent.on its present value.This however raises some difficult questions of principle, which will be discussed in Book V.
3.Next to consider some details relating to capital.It has been classed as Consumption capital, and Auxiliary or Instrumental capital: and though no clear distinction can be drawn between the two classes, it may sometimes be convenient to use the terms, with the understanding that they are vague.Where definiteness is necessary, the terms should be avoided; and explicit enumerations should be given.The general notion of the distinction which the terms are designed to suggest, can be gathered from the following approximate definitions.
Consumption capital consists of goods in a form to satisfy wants directly; that is, goods which afford a direct sustenance to the workers, such as food, clothes, house-room, etc.
Auxiliary, or instrumental, capital is so called because it consists of all the goods that aid labour in production.Under this head come tools, machines, factories, railways, docks, ships, etc.; and raw materials of all kinds.
But of course a man's clothes assist him in his work and are instrumental in keeping him warm; and he derives a direct benefit from the shelter of his factory as he does from the shelter of his house.(4*)We may follow Mill in distinguishing circulating capital "which fulfils the whole of its office in the production in which it is engaged, by a single use," from fixed capital "which exists in a durable shape and the return to which is spread over a period of corresponding duration."(5*)4.The customary point of view of the business man is that which is most convenient for the economist to adopt when discussing the production of goods for a market, and the causes which govern their exchange value.But there is a broader point of view which the business man, no less than the economist, must adopt when he studies the causes which govern the material wellbeing of the community as a whole.Ordinary conversation may pass from one point of view to another without any formal note of the change: for if a misunderstanding arises it soon becomes manifest; and confusion is cut short by a question or by a volunteered explanation.But the economist may take no risks of that sort: he must make prominent any change in his point of view or in his uses of terms.His path might have seemed smoother for the time, if he had passed silently from one use to another: but in the long run better progress is made by a clear indication of the meaning attached to each term in every doubtful case.(6*)Let us then during the remainder of this chapter deliberately adopt the social, in contrast with the individual point of view:
let us look at the production of the community as a whole, and at its total net income available for all purposes.That is, let us revert nearly to the point of view of a primitive people, who are chiefly concerned with the production of desirable things, and with their direct uses; and who are little concerned with exchange and marketing.
From this point of view income is regarded as including all the benefits which mankind derive at any time from their efforts, in the present and in the past, to turn nature's resources to their best account.The pleasure derived from the beauties of the rainbow, or the sweet taste of the fresh morning air, are left out of the reckoning, not because they are unimportant, nor because the estimate would in any way be vitiated by including them; but solely because reckoning them in would serve no good purpose, while it would add greatly to the length of our sentences and the prolixity of our discussions.For a similar reason it is not worth while to take separate account of the simple services which nearly every one renders to himself, such as putting on his clothes; though there are a few persons who choose to pay others to do such things for them.Their exclusion involves no principle; and time spent by some controversial writers on discussing it has been wasted.It simply follows the maxim De minimis non curat lex.A driver who, not noticing a pool in his way, splashes a passer by is not held to have done him legal injury; though there is no distinction in principle between his act and that of another, who by a similar lack of attention, did serious harm to someone else.
