Front Page Titles (by Subject) Dimensions of Capital, Credit and Debit. - The Theory of Political Economy
The Online Library of Liberty
A project of Liberty Fund, Inc.
Dimensions of Capital, Credit and Debit. - William Stanley Jevons, The Theory of Political Economy 
The Theory of Political Economy (London: Macmillan, 1888) 3rd ed.
About Liberty Fund:
The text is in the public domain.
Fair use statement:
Dimensions of Capital, Credit and Debit.
As the subject presents itself to me at present, I apprehend that capital is to be regarded simply as commodity. If so, the dimension of capital will be represented by M, and the amount of investment of capital, possessing the additional dimension of time, will have the symbol MT. How then are we to determine the quantitative nature of what Senior called Abstinence, that temporary sacrifice of enjoyment which is essential to the existence of capital? Senior thus explicitly defined what he meant by the word:1 "By the word Abstinence, we wish to express that agent, distinct from labour and the agency of nature, the concurrence of which is necessary to the existence of capital, and which stands in the same relation to profit as labour does to wages." He goes on to explain that abstinence, though usually accompanying labour, is distinct from it. A careful consideration of Senior's remarks shows that in reality abstinence is the endurance of want, the abstaining from the enjoyment of utility which might be enjoyed. Now the degree or intensity of want is measured by the degree of utility of commodity if it were consumed. Great degree of utility simply means great want, so that one dimension of abstinence must be U, and time being also obviously an element of abstinence, the required symbolic statement of its dimensions will be UT. This result satisfactorily corresponds with Senior's definition, for he says that abstinence is to profit as labour is to wages. Now profit or interest is clearly symbolised by M, and wages also by M, both consisting simply of quantities of commodity. Thus UT bears just the same relation to M that ET does to M, for E signifies the degree of painfulness of labour, and can barely be distinguished from U, except in sign.
The relation of abstinence, UT, to total utility, MU, also confirms our result. For if we convert abstinence into satisfaction, by giving a supply of commodity for consumption, this action is symbolically represented by multiplying UT into MT-1, which yields MU, or utility.
It will need no argument to show that the dimension of debit and credit, having regard only to what is borrowed and owed, will be the dimension of commodity simply, or M. According to the practice of commerce, a contract of debt is a contract to return a certain physically defined quantity of a specified substance, such as an ounce of gold, a ton of pig-iron, a hogshead of palm oil. No attempt is made to define quantities of utility, so that the debt when repaid shall yield utility equal to what it possessed when lent. The borrower and lender either take their chance about this, or provide for it in the rate of interest to be paid. It is equally obvious that in another sense the amount of credit or debit will be proportional to the duration of the operation, and will have the dimensions MT.
[]Political Economy, by Nassau W. Senior, 5th ed., 1863, p. 59.