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• Preface to the First Edition (1871)
• Preface to the Second Edition (1879)
• Preface to the Third Edition By Harriet Jevons
• Errata
• Chapter I: Introduction
• Mathematical Character of the Science.
• Confusion Between Mathematical and Exact Sciences.
• Capability of Exact Measurement.
• Measurement of Feeling and Motives.
• Logical Method of Economics.
• Relation of Economics to Ethics.
• Chapter II: Theory of Pleasure and Pain
• Pleasure and Pain As Quantities.
• Pain the Negative of Pleasure.
• Anticipated Feeling.
• Uncertainty of Future Events.
• Chapter III: Theory of Utility
• Definition of Terms.
• The Laws of Human Want.
• Utility Is Not an Intrinsic Quality.
• Law of the Variation of Utility.
• Total Utility and Degree of Utility.
• Variation of the Final Degree of Utility.
• Disutility and Discommodity.
• Distribution of Commodity In Different Uses.
• Theory of Dimensions of Economic Quantities.
• Actual, Prospective, and Potential Utility.
• Distribution of a Commodity In Time.
• Chapter IV: Theory of Exchange
• Importance of Exchange In Economics.
• Ambiguity of the Term Value.
• Value Expresses Ratio of Exchange.
• Popular Use of the Term Value.
• Dimension of Value.
• Definition of Market.
• Definition of Trading Body.
• The Law of Indifference.
• The Theory of Exchange.
• Symbolic Statement of the Theory.
• Analogy to the Theory of the Lever.
• Impediments to Exchange.
• Illustrations of the Theory of Exchange.
• Problems In the Theory of Exchange.
• Complex Cases of the Theory.
• Competition In Exchange.
• Failure of the Equations of Exchange.
• Negative and Zero Value.
• Equivalence of Commodities.
• Acquired Utility of Commodities.
• The Gain By Exchange.
• Numerical Determination of the Laws of Utility.
• Opinions As to the Variation of Price.
• Variation of the Price of Corn.
• The Origin of Value.
• Chapter V: Theory of Labour
• Definition of Labour.
• Quantitative Notions of Labour.
• Symbolic Statement of the Theory.
• Dimensions of Labour.
• Balance Between Need and Labour.
• Distribution of Labour.
• Relation of the Theories of Labour and Exchange.
• Relations of Economic Quantities.
• Various Cases of the Theory.
• Joint Production.
• Over-production.
• Limits to the Intensity of Labour.
• Chapter VI: Theory of Rent
• Accepted Opinions Concerning Rent.
• Symbolic Statement of the Theory.
• Illustrations of the Theory.
• Chapter VII: Theory of Capital
• The Function of Capital.
• Capital Is Concerned With Time.
• Quantitative Notions Concerning Capital.
• Expression For Amount of Investment.
• Dimensions of Capital, Credit and Debit.
• Effect of the Duration of Work.
• Illustrations of the Investment of Capital.
• Fixed and Circulating Capital.
• Free and Invested Capital.
• Uniformity of the Rate of Interest.
• General Expression For the Rate of Interest.
• Dimension of Interest.
• Peacock On the Dimensions of Interest.
• Tendency of Profits to a Minimum.
• Advantage of Capital to Industry.
• Are Articles In the Consumers' Hands Capital?
• Chapter VIII: Concluding Remarks
• The Doctrine of Population.
• Relation of Wages and Profit.
• Professor Hearn's Views.
• The Noxious Influence of Authority.
• Appendix I
• Appendix Ii

Capital is concerned with Time.

Several economists have clearly perceived that the time elapsing between the beginning and end of a work is the difficulty which capital assists us to surmount. Thus James Mill has said: "If the man who subsists on animals cannot make sure of his prey in less than a day, he cannot make sure of his prey in less than a day, he cannot have less than a whole day's subsistence in advance. If hunting excursions are undertaken which occupy a week or a month, subsistence for several days may be required. It is evident, when men come to live upon those productions which their labour raises from the soil, and which can be brought to maturity only once in the year, that subsistence for a whole year must be laid up in advance."1

Much more recently, Professor Hearn has said, in his admirable work entitled Plutology:1 "The first and most obvious mode in which capital directly operates as an auxiliary of industry is to render possible the performance of work which requires for its completion some considerable time. In the simplest agricultural operations there is the seed-time and the harvest. A vineyard is unproductive for at least three years before it is thoroughly fit for use. In gold mining there is often a long delay, sometimes even of five or six years, before the gold is reached. Such mines could not be worked by poor men unless the storekeepers gave the miners credit, or, in other words, supplied capital for the adventure. But, in addition to this great result, capital also implies other consequences which are hardly less momentous. One of these is the steadiness and continuity that labour thus acquires. A man, when aided by capital, can afford to remain at his work until it is finished, and is not compelled to leave it incomplete while he searches for the necessary means of subsistence. If there were no accumulated fund upon which the labourer could rely, no man could remain for a single day exclusively engaged in any other occupation than those which relate to the supply of his primary wants. Besides these wants, he should also from time to time search for the materials on which he was to work."

These passages imply, as it seems to me, a clear insight into the nature and purposes of capital, except that the writers have not with sufficient boldness followed out the consequences of their notion. If we take a comprehensive view of the subject, it will be seen that not only the chief but the sole purpose of capital is as above described. Capital simply allows us to expend labour in advance. Thus, to raise corn we need to turn over the surface of the soil. If we proceed straight to the work, and use the implements with which nature has furnished us—our fingers—we should spend an enormous amount of painful labour with very little result. It is far better, therefore, to spend the first part of our labour in making a spade or other implement to assist the rest of our labour. This spade represents so much labour which has been invested, and so far spent; but if it lasts three years, its cost may be considered as repaid gradually during those three years. This labour, like that of digging, has for its object the raising of corn, and the only essential difference is that it has to precede the production of corn by a longer interval. The average interval of time for which labour will remain invested in the spade is half of the three years. Similarly, if we possess a larger capital, and expend it in making a plough, which will last for twenty years, we invest at the beginning a great deal of labour which is only gradually repaid during those twenty years, and which is therefore, on the average, invested for about ten years.

It is true that in modern industry we should seldom or never find the same man making the spade or plough, and afterwards using the implement. The division of labour enables me, with much advantage, to expend a portion of my capital in purchasing the implement from some one who devotes his attention to the manufacture, and probably expends capital previously in facilitating the work. But this does not alter the principles of the matter. What capital I give for the spade merely replaces what the manufacturer had already invested in the expectation that the spade would be needed. Exactly the same considerations may be applied to much more complicated applications of capital. The ultimate object of all industry engaged with cotton is the production of cotton goods. But the complete process of producing those goods is divided into many parts; and it is necessary to begin the spending of labour a long time before any goods can be finished.

In the first place, labour will be required to till the land which is to bear the cotton plants, and probably two years at least will elapse between the time when the ground is first broken and the time when the cotton reaches the mills. A cotton mill, again, must be a very strong and durable structure, and must contain machinery of a very costly character, which can only repay its owner by a long course of use. We might spin and weave cotton goods as in former times, or as it is done in Cashmere, with a very small use of capital; but then the labour required would be enormously greater in proportion to the produce. It is far more economical in the end to spend a vast amount of labour and capital in building a substantial mill and filling it with the best machinery, which will then go on working with unimpaired efficiency for thirty years or more. This means that, in addition to the labour spent in superintending the machines at the moment when goods are produced, a great quantity of labour has been spent from one to thirty years in advance, or, on the average, fifteen years in advance. This expenditure is repaid by an annuity of profit extending over those thirty years.

The interval elapsing between the first exertion of labour and the enjoyment of the result is further increased by any time during which the raw material may lie in warehouses before reaching the machines; and by the time employed in distributing the goods to retail dealers, and through them to the consumers. It may even happen that the consumer finds it desirable to keep a certain stock on hand, so that the time when the real object of the goods is fulfilled becomes still further deferred. During this time, also, capital seems to me to be invested, and only as actual utilisation takes place is expenditure repaid by corresponding utility enjoyed.

I would say, then, in the most general manner, that whatever improvements in the supply of commodities lengthen the average interval between the moment when labour is exerted and its ultimate result or purpose accomplished, such improvements depend upon the use of capital. And I would add that this is the sole use of capital. Whenever we overlook the irrelevant complications introduced by the division of labour and the frequency of exchange, all employments of capital resolve themselves into the fact of time elapsing between the beginning and the end of industry.

[[1]]Elements of Political Economy, 3d ed., 1826, p. 9.

[[1]]Plutology; or The Theory of the Efforts to Satisfy Human Wants, 1864 (Macmillan), p. 139.