THE THEORY OF INTEREST

masquerading as a scientific economic fact. Economists,strange to say, in offering answers to the socialists, haveoften attacked the first proposition instead of the second.The socialist is quite right in his contention that the valueof the product does exceed the cost . 2 In fact, this propo-sition is fundamental in the whole theory of interest.There is no necessity that the value of a product mustequal the costs of production. On the contrary, it nevercan normally be so.

In attempting to prove that the laborer should receivethe whole product, the socialist stands on strongerground than has sometimes been admitted by over-zealous defenders of the capitalist system. The socialistcannot be answered offhand simply by asserting that capi-tal aids labor, and that the capitalist who owns a plowearns the interest payment for its use quite as truly asthe laborer operating the plow earns his wages by hislabor. For the socialist carries the argument back a stageearlier, and contends that the payment for the use ofthe plow should belong, not to the capitalist who owns it,but to the laborers who originally made it, includingthose who made the machinery which helped to make it.He is quite correct in his contention that the value ofthe uses of the plow is attributable to those who made it,and that, nevertheless, the capitalist, who now owns it,not the laborers who made it in the past, enjoys the valueof these uses. The capitalist is, in a sense, always living onthe product of past labor. An investor who gets his in-come from railroads, ships, or factories, all of which areproducts of labor, is reaping what past labor has sown.

“While this assertion is made dogmatically at this point, the proofof its soundness is contained in Chapter XX, § 7, and in the Appendix to Chapter XX.

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