Page:The Economic Journal Volume 1.djvu/700

678 capital of the same value as the machine now, should swell to the value of 15s. a year hence. Interest is a problem of surplus value; value does not come from production but from human want; a fortiori, surplus value cannot be accounted for by simple production. It is a common belief of practical men that interest is paid for the 'use'of capital, and on this formula is based the theory of which Knies is the most distinguished exponent. Here the word ' use' covers a singular ambiguity. Interest is paid on all capital, whatever its shape. What, then, is the use of that form of capital represented by a hundredweight of coals ? The only possible use of coals is to burn. If interest, then, is paid for the use of coals, as distinguished from the coals themselves, we are committed to the statement that a borrowed hundredweight of coals, which is not repaid for a year, has been all that time giving off some kind of 'use'; while any unprejudiced person would say that the interest paid in addition to the hundredweight of coals replaced was the price of the deferred payment of the coals. 'What misleads us is that we are accustomed to say, 'I lend you for a year,' whereas what we should say is, ' I sell you now for 15s. a year hence.' And, again, we generally make loans in money, and so generally think of all loans as if they consisted of durable goods. But what is the essential difference between a durable and a perishable good ?

Every good is nothing. but the sum of its uses, and the value of a good is the value of all the uses contained i it. If a good, such as gunpowder, can only serve its purpose or afford its use all at one time, we employ the word consumption for the act by which the good gives forth its use. If, on the contrary, it is so constituted that its life-work extends over a period of time, then each individual use dimiishes the sum of uses which constitutes the essential nature of the good. But Consumption is only a single exhaustive use, and Use is only a prolonged consumption.

This at once enables us to estimate the Use theory of interest. The 'use of capital' is not something apart from the using of the goods which constitute the capital; it is their consumption, fast or slow as the case may be; and a payment for the use of capital is nothing but a payment for the consumption of capital. The true nature of the loan is not that we get the use of capital, ancl return it deteriorated, but that we get the capital itself, consume it, and pay for it by a new sum of value which somehow includes interest. If, however, we admit this, we are landed in the old problem once more: How do goods, when used as capital in