cing power. It was naturally expected that labour-saving
inventions would make real poverty a thing of the past. Disappointment,
however, after disappointment has followed. Discovery upon discovery,
invention after invention, have neither lessened the toil of those who
most need respite nor brought plenty to the poor. The association of
poverty with progress is the great enigma of our time.

I propose to attempt to solve by the methods of political economy the
great problem; to seek the law which associates poverty with progress
and increases want with advancing wealth.

The inquiry is--why, in spite of increase in productive power, do wages
tend to a minimum which will give but a bare living? The answer of
current political economy is that wages are fixed by the ratio between
the number of labourers and the amount of capital devoted to the
employment of labour, and constantly tend to the lowest amount on which
labourers will consent to live and reproduce; because the increase in
the number of labourers tends naturally to follow and overtake any
increase in capital. This argument is inconsistent with the general fact
that wages and interest do not rise inversely, but conjointly. My
proposition is that wages, instead of being drawn from capital, are in
reality drawn from the product of the labour for which they are paid.

The three agents or factors in production are land, labour and capital,
and that part of the produce which goes to the second of these factors
is wages. Land embraces all natural materials, forces, and
opportunities, and therefore nothing that is freely supplied by nature
can be properly classed as capital. Labour includes all human exertion,
and hence human powers, whether natural or acquired, can never be
properly classed as capital.

We exclude from the category of capital everything which must be
included either as land or labour, and therefore capital consists of
those things which are neither land nor labour, but which have resulted
from the union of these two original factors of production. Nothing can
be capital which is not wealth; only such things can be wealth the
production of which increases, the destruction of which decreases, the
aggregate of wealth. Increase in land values does not represent any
increase in the common wealth, for what landowners gain by higher prices
the tenants or purchasers will lose.

All wealth is not capital. Capital is only that part of wealth which is
devoted