CHAPTER  VII
 

                THEORY OF CAPITAL



              The Function of Capital.



In considering the nature and principles of Capital, we

enter a distinct  branch of our subject.  There  is no

close or necessary connection between the employment

of capital and the processes of exchange.  Both by the

use of capital and by exchange we are  enabled vastly

to increase the sum of utility which we enjoy; but it

is conceivable that  we might have the advantages  of

capital without those of exchange.  An isolated man

like  Alexander  Selkirk might feel  the benefit  of a

stock of provisions, tools, and  other means of facili¬

tating  industry,  although cut off from  traffic  with

other  men.   Economics,  then,  is not  solely the

science of Exchange or Value :  it  is also the science of

Capitalisation.

   The views which I shall endeavour  to establish on

this subject are in fundamental agreement with  those

adopted  by Ricardo;  but  I   shall try to  put the

Theory of  Capital  in  a  more  simple and consistent