“For a man to produce a consumers’ good, he must obtain labor services and the services of land and capital goods, in order to use the technological “know-how” available in the production of the good. The capitalists are the only ones who spend money on producers’ goods (producers’ goods include labor, land, and capital goods.”
“There are two alternatives in regard to the final ownership of the product (before it is sold to the consumer)—although the latter is the nearly universal condition, it will be convenient to begin by analyzing the first alternative: (a) All the owners of these factors jointly own the final product; (b) The owner of each of the factors sells the services of his factor to someone else, and the latter (who may himself contribute a factor) sells the good at a later date to the consumer. The term “capitalists” will be confined to the owners in the second alternative.”
“The capitalists relieved the owners of the original factors from the necessity of sacrificing present goods and waiting for future goods. Instead, the capitalists have supplied present goods from their own savings (i.e., money with which to buy present goods) to the owners of the original factors.”
Next:
- 13-5b1 Without the capitalists, the income earned by the owners of land and labor fluctuates with consumer demand and is received at a much later date
- 13-5c The capitalists’ money for investment must be first saved
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