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

In other words, the capitalists hedge this risk for the owners of land and labor.

“Since every capital good analytically resolves itself into original nature-given and labor factors, it is evident that no money could accrue to the owner of a capital good (under our assumptions where all factors are specific and the capitalist doesn’t exist). All 100 ounces must eventually be allocated to labor and owners of nature-given factors exclusively. To the truism that the income from sale of the consumers’ good equals the consumers’ expenditure on the good, we may add a corresponding truism for each stage of production, namely, that the income from sale of a capital good equals the income accruing to the factors of its production. The income gained from the final sale of the product to the consumers accrues only to the owners of land and labor (again, under the said assumptions); there is no separate group of owners of capital goods to whom income accrues. Their income is received only at a much later date. The joint monetary income earned by the owners of the factors fluctuates pari passu with consumer demand for the product.”

“Added to the leisure-labor element, the workers, in this case, must wait for some time before earning the return, while they must give up their leisure in the present or in various periods earlier than the return is obtained. Time, therefore, is a critical element in production, and its analysis must pervade any theory of production.”

Next:

• 13-5b1a Saving is not necessarily a monetary phenomenon—the restriction of present consumption constitutes saving
• 13-5b2 Money is usable in every line of production

Related:

• 13-1a3a2e2 The introduction of money creates the money market wherein everything can be exchanged for anything in the economy
• 13-3 All action must take place in time
• 13-5 Man prefers his end to be achieved in the shortest possible time (i.e., positive time preference)
• 13-5a The role of capital is to advance men in time toward their objective in producing consumers’ goods
• 13-5d The capitalists per se are not powerful