Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public PolicyClark, John Bates
General
Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy
Clark, John Bates
Economics
_True Capital rather than Capital Goods moved in Making such Tests of
Productivity._--In applying these tests with scientific accuracy we
should take away the true _capital_ used in connection with a
rent-paying instrument and use it as marginal capital elsewhere,
rather than take away the particular concrete thing in which that
capital is now embodied. In the case of the ship the accurate test is
made, not by taking stores, etc., bodily out of it and putting them
into other ships, but by letting the stores first earn what they can
where they are, converting the earnings into money, and, when the
stores are completely used up, spending the money to procure marginal
additions to the outfit provided for the other ships.
_One Difference between Land and Artificial Capital Goods._--In the
case of land a particular area is marginal or no-rent land, and, in a
static state, it remains so. Any particular ship, wagon, engine, or
other made tool begins its career as a rent payer and ends it as a
no-rent instrument. If we watch the whole social stock of instruments
of production, we shall see the no-rent points not fixed in location,
but shifting from place to place. Now this machine, now another, and
now still another reaches the unproductive state and is supplanted by
instruments of similar kind that are new and efficient.
_Original Elements in the Soil._--The real difference between the rent
of a piece of land and that of a building, machine, vehicle, or any
similar instrument arises from the fact that the land is not going to
destruction and the artificial instrument is. There are elements in
what is commonly called land that wear out as do the tools that are
used in tilling it, but these elements are not land in the economic
sense. Land, as Ricardo long ago said, consists in the "original and
indestructible powers of the soil." He singles out certain constituent
elements of every farm, forest, building site, or other piece of what
is called land in ordinary usage, and gives to this new concept the
name _land_ in an economic sense. These so-called "powers" are
original elements because man does not make them; they are provided
altogether by nature, and the only way in which man may be said to
impart any productive power to them is by putting them into
combinations in which they can produce. When men settle upon what has
been vacant land, they bring the land into combination with labor, and
when they break up the land for tillage and put buildings on it, they
combine it with artificial capital. By means of these combinations
land acquires productive power; but physically considered, it is
altogether a natural product.
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