Believe this if you like - 1

Friday, 03 June 2011 05:46
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"Wealth is created when Capital is invested to give a higher return than putting it in the bank, and for that you need to take a risk."

Depends how you define wealth. In my book, the first wealth was created when someone scooped out a shell so that it could be used as a container to put berries in, thereby creating capital, ie wealth used for productive purposes. From that moment on, it was possible to go around collecting berries instead of picking them and eating straight off the plants they were growing on.

This enabled some people to stay back at the camp and do things like chip lumps of stone to make them into things like knives and arrow heads - more capital. Eventually someone finds ways of harnessing natural forces like the wind, water, horse power and fossil fuels, thereby enabling labour to produce many times more than it could produce with muscle power.

Now the curious thing is that a tenfold increase in productivity did not produce a tenfold increase in wages, because these remained at bare subsistence. In accordance with Ricardo's Law of Rent, the main part of the increase in wealth production went in land rents and enriched those who owned the land on which the buildings, mines, factories, etc, stood. It did not even enrich to owners of capital per se, though these were often one and the same as they were the only ones who could purchase the capital.

Hence Marx's fatal misapprehension about the evils of capital, not noticing that the appropriated surplus value was nothing other than economic rent of land in conditions of full land enclosure.
 

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