But this account does not bring out the essential point as brief reference to a very famous controversy will show.  Some ingenious writers in the last century, the most notable of whom was Karl Marx, set out to prove that, in our modern society, workpeople are “exploited,” robbed of the “whole produce of their labor,” to the full extent of the return which accrues to capital.  The argument was exceedingly complex in detail; but it boils down to this:  The factories and machinery which are admittedly essential to production were themselves produced in exactly the same way as consumable goods.  They were produced by labor, working with the assistance of nature, and, again, if you choose, of capital in the form of further factories, machinery, etc.  But these further capital goods can in their turn be regarded as the product of labor, nature and capital; and so we can proceed until it seems as though the element of capital must disappear in the last analysis, as though labor and nature were the sole ultimate agents of production, and the reward of capital represented no more than the exercise of the exploiter’s power.  In one form or another this argument still dominates the minds of a large proportion of the so-called “rebels” against the existing social order.

If we are to meet this argument, if, which is perhaps more important, we are to understand the true nature of capital, we cannot rest content with saying that it consists of factories and machinery, and that these are essential to the worker.  Just as it was well to get behind the money terms, in which we often think of capital, to the real goods; so we have now to get behind the real goods to something else.  What this something else is, the first chapter may have already done something to reveal.

Sec.2. Waiting for Production.  Between production and consumption there is an interval of time.  All productive processes take time to accomplish.  The farmer must plow the soil and sow the seed months before he can reap the harvest which will reward him for his efforts.  Meanwhile, he must live, and in order that he may live he must consume.  If he employs laborers he must pay them wages, that they too may consume and live.  For both purposes he requires purchasing power, which represents of course command over real things; and if he has not sufficient purchasing power of his own, he must borrow from someone else who has.  In either case it is not enough that the farmer and his laborers should work; no less essential is it that someone should wait.  The farmer must wait till he has sold his crops, both for the reward of his own labor and for the repayment of the wages he advances in the meantime to his laborers.  Or, if he cannot afford to wait, and borrows in anticipation of the harvest, then the lender must wait, until the farmer, having sold his crop, is able to repay him.  Thus the period of time involved in all production gives rise to a demand for waiting, which someone or other must supply, if the production is to take place.  It is this waiting which is the essential reality underlying the phenomena of capital and interest.  It is really this which constitutes an independent factor of production, distinct from labor and nature, and equally necessary.