The inquiry is--why, in spite of increase in productive power, do wages tend to a minimum which will give but a bare living? The answer of current political economy is that wages are fixed by the ratio between the number of labourers and the amount of capital devoted to the employment of labour, and constantly tend to the lowest amount on which labourers will consent to live and reproduce; because the increase in the number of labourers tends naturally to follow and overtake any increase in capital. This argument is inconsistent with the general fact that wages and interest do not rise inversely, but conjointly. My proposition is that wages, instead of being drawn from capital, are in reality drawn from the product of the labour for which they are paid. The three agents or factors in production are land, labour and capital, and that part of the produce which goes to the second of these factors is wages. Land embraces all natural materials, forces, and opportunities, and therefore nothing that is freely supplied by nature can be properly classed as capital. Labour includes all human exertion, and hence human powers, whether natural or acquired, can never be properly classed as capital. We exclude from the category of capital everything which must be included either as land or labour, and therefore capital consists of those things which are neither land nor labour, but which have resulted from the union of these two original factors of production. Nothing can be capital which is not wealth; only such things can be wealth the production of which increases, the destruction of which decreases, the aggregate of wealth. Increase in land values does not represent any increase in the common wealth, for what landowners gain by higher prices the tenants or purchasers will lose. All wealth is not capital. Capital is only that part of wealth which is devoted to the aid of production. It is wealth in the course of exchange, for production includes not merely the making of things, but the bringing of them to the consumer. Wherever we analyse the facts we find that without production wages would not, and could not, be. As the rendering of labour precedes the payment of wages, and as the rendering of labour in production implies the creation of value, the employer receives value before he pays out value--he but exchanges capital of one form for capital of another form. Hence the payment of wages in production never involves the advance of capital or ever temporarily lessens capital.