Men, cooperating under the functional system of the division of labor, have created all the wealth which the daydreamers consider as a free of charge gift of character. With regard to the “distribution” of the wealth, it is nonsensical to refer to an allegedly divine or natural basic principle of justice. What counts is not the allocation of portions out of a fund presented to man by nature. The problem is quite to further those cultural institutions which allow people to continue and to enlarge the production of all those activities that they need.
This is practical only when one implies that the Lord presented mankind with a definite level of machines and expected that these contrivances will be distributed similarly among the various nations. Yet the capitalistic countries were bad enough to consider possession of much more of this stock than “justice” could have assigned to them and therefore to deprive the inhabitants of Asia and Africa of their fair portion. The only way to obtain the generation of additional capital goods is saving. If all the products produced are consumed, no new capital comes into being.
But if usage lags behind production and the surplus of goods newly produced over goods consumed is employed in further production processes, these processes are completed by aid from more capital goods henceforth. All of the capital goods are intermediary goods, stages on the road that leads from the first employment of the initial factors of production, i.e., natural resources and human labor, to the ultimate turning out of goods ready for intake. All are perishable.
They are, eventually, worn in the processes of production away. If all the products are consumed without replacement of the capital goods which were consumed in their production, capital is consumed. Should this happen, further creation will be aided only by a reduced amount of capital goods and will therefore render a smaller result per unit of the natural resources and labor employed.
- Japanese Yen
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- Samsad Dictionary
To prevent this type of dissaving and disinvestment, one must devote a part of the productive work to capital maintenance, to the replacing of the capital goods soaked up in the production of useful goods. Capital is not just a free gift of God or of nature. It is the outcome of a provident restriction of consumption on the right part of man. It really is created and increased by saving and maintained by the abstention from dissaving.
Neither have capital or capital goods in themselves the power to improve the efficiency of natural resources and of human labor. Only when the fruits of saving are employed or invested sensibly, do they increase the output per unit of the input of natural resources and of labor. If this isn’t the case, they may be dissipated or wasted. The accumulation of new capital, the maintenance of previously accumulated capital and the use of capital for raising the productivity of human effort are the fruits of purposive human action.
To speak of the productivity of labor is practical only if one identifies the marginal productivity of labor, i.e., to the deduction in online result to be caused by the elimination of one worker. It refers to a definite economic quantity Then, to a determinate amount of goods or its equal in money. The concept of a general efficiency of labor as resorted to in popular discuss an allegedly natural right of the workers to claim the total increase in efficiency is bare and indefinable.
It is dependant on the illusion that it is possible to determine the shares that all of the many complementary factors of production has physically added to the turning out of the product. If one cuts a sheet of paper with scissors, it is impossible to see quotas of the results to the scissors (or to each of the two blades) and also to the person who taken care of them. To manufacture an automobile you need various machines and tools, various raw materials, the labor of various manual employees and, first of all, the plan of a designer.
But nobody can determine what quota of the completed car is to be physically ascribed to each one of the various factors the coprocedure of which was necessary for the production of the car. But if we place the question in this manner specifically, the answer must be: capital. All pseudoeconomic doctrines which depreciate the role of saving and capital deposition are absurd. What constitutes the higher wealth of the capitalistic culture as against small wealth of a noncapitalistic culture is the actual fact that the available supply of capital goods is higher in the former than in the second option.