Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy
John Stuart Mill · en
But some persons want to see the process in the concrete, and the
same principle may be illustrated by a practical case. It is
supposed that all laborers have the necessaries of life only, but
none of the comforts, decencies, and luxuries. Let A be a farmer
in New York, who can also weave carpets, and B a lumberman in
Maine. A begins to want a better house, and B wishes a carpet,
both having food, clothing, and shelter. One of the capitalists
abstaining from unproductive consumption, as above, is X, who,
knowing the two desires of A and B, presents himself as a
middle-man (i.e., he gives a market for both men, as is found in
every center of trade, as well as in a country store), furnishing
A the tools, materials, etc., and giving him the promise of lumber
if he will create the carpet, and promising B the carpet if he
will likewise produce the additional lumber. To be more matter of
fact, X buys the carpet of A, and sells it to B for the lumber.
Thus two new articles have been created, and for their exertions A
has received additional wages (either in the form of lumber, or of
the money paid him for the carpet), and B has received additional
wages (either in the form of a carpet, or the money paid him by X
for the lumber). If A and B are regarded as typifying all the
laborers, and X all the above capitalists, in the multiplicity of
actual exchanges, it will be seen that A and B are creating new
articles to satisfy their own demand, instead of meeting the
demands of X. If their primary wants are already supplied, then
they take their additional wages in the form of comforts and
decencies. When Class X forego their consumption, but add that
amount to capital, they do not give up their title to that
capital, but they transfer the use of it, or their consuming
power, to others for the time being. This question will be more
fully discussed in § 6.
§ 3. Capital is the result of Saving, and all Capital is Consumed.
A second fundamental theorem respecting capital relates to the source from
which it is derived. It is the result of saving.