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- ECONOMIC PRINCIPLES

place in the goods in which the capital is embodied, and the
great contrast in the length of time during which the investment
 in particular goods endures.
The capital which is productive, then, is not, strictly
speaking, money capital, but instrumental goods acquired
by means of the money capital. Dealings in capital are
conveniently effected in terms of money, and interest is
spoken of as interest on money. The market for capital is
a market for values, while the utilisation of capital is a
utilisation of actual instrumental goods, by means of which
are secured other goods, whose values enable payment to be
made of the borrowed amount and of a price for its use,
The thing which is bought and paid for by interest is control
of capital. The right to determine what forms of capital
shall be utilised, and how they shall be utilised, is thus
secured. The right of control of money is exchanged for a
right of control of ships or ironworks or weaving sheds or
other concrete capital. Because these things do not exist in
anlimited supply, the right of control over them affords
opportunity for rendering services the payment for which
yields a profit.
Whence arises the productivity of which this profit is an
expression? The answer is given in various terms. By
some, reference is made to the increase in the amount of
goods which can be produced by the aid of capital with
squal labour, an amount so great as to outweigh the smaller
utility which they have as future goods, as compared with
present goods physically identical with them. By others,
attention is directed to the fact that capital enables its
possessor to adopt indirect or roundabout methods of
production, and that these roundabout methods are more
efficient than simpler direct methods. But what is the source
of the greater efficiency of the roundabout method? That
greater efficiency, be it noted, is not to be assumed to be in
proportion to the indirectness of the process of production.
The source of this greater efficiency is to be found, in the
main, if not entirely, in the fact that, in the roundabout
processes, man’s forces are either assisted by some of the
forces of nature, or are applied so as to be less opposed by