labour n capital

in addition to being means of exchange, money is also means of measuring the value of men labour. Labour, in economic theory is any work under taken in return for a fixed payment. a mother may work very hard in caring for the children, but she receives no fixed wages for this work. it is not therefore labour in the strict economic sense. Economicts are interested in measuring the services which people render to each other. Altough aware of the services people provides for nothing. they are not concerred with such service.

Human labour produces both goods and service. the activities of a farm worker and a nurse are very different, but each is measurable in terms of payment received. if however a farmer is self employed and does not receive a fixed wage from anyone else, he is in a different category from the nurse and from his own farm workers. his activities are not whoolly labour. his workers receive thier wages but he receives whatever surplus emerges from his farming. This surplus like any surplus in industry or commerce, is what we usually call "profit"

Employers obtain thier net profits only after they have paid all expenses arising out of their business activity. The surplus is not usually available only for employers and their families. Normally part of it goes to those who have provided the initial capital needed to start business. such business may fail. Both those who provide the capital and those who run the business agree to bear any risk. if the business successful the risk taking has been justified, and invested capital earns part of the profits as a return on the invesement and the period during which the capital was at risk.

Capital in this instance is simply the accumulation of previous surpluses on previous business activities. in this way the past is used to finance the future. The accumulation of capital is almost always deliberate, either on the part of individual citizens or on the part of the state. even in non capitalistic societes a certain part of the surplus achieved in any enterprise is "plough back" into the system in order promote further growth