Functional socialism

CAPITAL 113

the Labour Party, with these facts staring it in the face, proceed on the lines indicated, the final judgment will be that it was guilty of levity or cynicism. Nor will all the financial magic in the world dissolve the burden. Finance will be triumphant.

ADAM SMITH AND THE CREATION OF WEALTH

These considerations compel a careful inquiry into the nature of capital. The best definition known to me is Irving Fisher’s. Revenue is regarded as a continual flow of services, whilst capital is defined as total wealth existing at one particular moment from which these services flow out. If our capital money and currency accurately represent that total wealth, then we have a complete functional definition. And all that remains is to utilize our total wealth—our real wealth—by the issue of credit precisely adequate to the maintenance of our industrial processes, and never in excess of our total wealth. That and no more. For there is no security in any piece of paper or metal disc which has not its counterpart in material wealth. We can, however, better understand our problem if we go back to the father of political economy. Adam Smith has long since sunk from view behind the mountainous problems of modern industry; but he had the enormous advantage over his successors in that he saw the creation of wealth undistracted by its subsequent extraneous growths: saw wealth in its nudity. He died in 1790, with the great industry looming up before him.

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