Principles of Economics Being a Revision of Introduction to Economics

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DISTRIBUTION: INTEREST 149. Interest has already been defined as what is paid for the use of capital. From the point of view of distribution it is the share of income that is assigned to capital goods, or more accurately to the owners of such goods, for the part these play in production. The great variety of capital goods and the diversity of the services which they render were dis- cussed in a previous chapter (Section 83). As there ex- plained (Section 78), the creation of capital goods requi
...res, in addition to the factors involved in all production, saving, abstinence and waiting. Those who convert their incomes into capital instead of spending them contribute to production in these ways just as truly as do workmen by their activities. And just as ' ' labor in and for itself is not valuable ' ' but only " because through it valuable goods are produced " (Section 105), so capital goods are only valuable because they too assist production.
The problem of interest, like the problem of wages, is three- fold.


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