nition have been obscured and befogged by several
conceptions and phrases relating to capital which have found
acceptance among English economists.

Chief and foremost among these errors is the framing of a definition
of capital so as to exclude the clear separation of productive goods
and machinery, the economic means, from consumptive goods, the
economic end. So long as a definition of capital is taken which
includes any consumptive goods whatsoever, two results follow. One is
a hopeless confusion in the commercial mind, for in commerce
everything is capital which forms the stock or plant of a commercial
firm, and nothing is capital which does not form part of such stock or
plant. Secondly, to include under capital the food in the possession
of productive labourers or any other consumptive goods is an
abandonment of the idea of consumption as the economic end and a
substitution of production.

If we follow Boehm-Bawerk and the Austrian economists in definitely
refusing to include the consumptive goods of labourers as
capital,[164] we get a conception of capital which is at once in
accordance with the universal conception of commercial men, and which
enables us to realise the vital relation between capital and
consumption. We now see Capital in the form of stock and plant at each
point in the industrial machine deriving its use and value from its
contribution to the end, Consumption, and dependent for its quantity
upon the quantity of Consumption. We have seen that a demand for
commodities is the true and exact determinant of the quantity of
capital at each industrial stage. It is therefore the determinant of
the aggregate of wealth which can function as useful forms of capital
in the industrial community at any given time. The aggregate of plant
and stock which constitute the material forms of capital at the points
A, B, C, D, E must in a properly adjusted state of industry have an
exact quantitative relation to the consumption indicated by F. If F
increases, the quantity of forms of capital at A, B, C, D, E may
severally and collectively increase; if F declines, the useful forms
of capital at each point are diminished. Since we have seen that the
sole object of saving from the social point of view is to place new
forms of capital at one of the points A, B, C, D, E, it is evident
that the amount of useful saving is limited by the rate of
consumption, or financially, by the amount of "spending." Where there
is an im