Reflections on the Formation and Distribution of Wealth
Anne R.J. Turgot
E. Spragg: 1774
(EN: This is rather a long ramble that strays from one topic to another without much structure. Interesting stuff, but a total meander.)
If all men had the ability and the resources to produce what was necessary for their own sustenance, and nothing more, then commerce would be unknown. No man would work for another, nor have any need to purchase the product of another, as all would have the ability to produce exactly what he needed to consume, no less and no more, and presuming that this could be constantly done without interruption, there would be no need for men to interact with one another at all.
But such a state does not exist and could not exist. If it were imposed upon men, it would not last: any interruption in productive activity would result in an insufficiency of the necessities for a given individual, and as his neighbors had nothing to spare, it would lead to his present death and, one by one, to the extinction of the species.
Nor is such a state of existence possible in nature. Not every soil is capable of producing every material, and not every man is skilled at producing everything he needs. And as this is the case then men produce according to the skill and resources that is their own, and trade with one another for the goods that others can produce better than themselves.
Neither is there much in nature itself that is without labor fit for consumption: wheat must be ground into flour and baked into bread; sheep must be raised for wool to be shorn, thread to be spun, cloth to be woven, and usable articles of clothing to be cut and sewn; timber must be harvested and milled to planks, ore dug and refined and fashioned into nails, to build even a crude and rudimentary hut. Some men raise the raw materials and others work upon them in a myriad of ways to render a consumable good. And even though a single man, in theory, may perform all of these tasks, he is not equipped or skilled to perform all of them well or efficiently.
And this is the basis for trade among men: let each do what he is best skilled and equipped to and let them trade that which they do well for that which others do better than them, and the consequence is that societies shall have the best and most of everything that can be made by all its members using all its resources. Everyone profits by this arrangement, save for those who are incapable of producing anything that is wanted by anyone else - and even they can be hired by others to do whatever it is they are able to contribute to the production, consumption, and welfare of their society.
The unskilled workman is capable of producing the least, but at the same time enjoys the greatest liberty to put his hands to good use elsewhere. An exceptionally skilled weaver is drawn to weaving and cannot be as productive at any other activity - to quit weaving would benefit himself and his society less - but the unskilled worker can switch from working the mine to working the field to carrying water or any of a variety of menial tasks and be equally productive and valuable. But at the same time he may be seen to have less liberty in that he will always be dependent on someone else to give him work to do.
Skill at productive activity is the basis of the creation of wealth: the farmer who can grow more wheat than his neighbor will by virtue of his skill have more wheat to consume. In a commercial society, he has more wheat to trade, and gains more goods in exchange - because what he gets from others is traded in equal measure for what others get from him. It is only in withholding his labor that he robs society of the benefit of the product he might have made, and robs his own house of the benefit they might have had from his productivity.
However, a man does not desire all things in unlimited quantities: there is a point at which a man has produced all he wants or needs to consume: when he has all he needs to eat for the present and foreseeable future, there is no point in spending more time in farming; when he has all the clothing he needs, there is no point in continuing to spin and weave and sew. Hence a man is motivated to produce only to the extent of his own consumption and no further. Similarly, a society does not desire all things in unlimited quantities, and for a society to produce more food than it needs to consume is waste: the food will rot and the labor and resources expended in producing it might have been put to better use.
The prices of goods in a market therefore direct producers to engage in the activities that are most desired by the members of a society: where there is great demand for a product that is not being produced in sufficient quantity, the price rises and producers are motivated to create more; where there is little demand for something that is not desired in such quantity, the prices fall and producers are motivated to find better use for their resources.
The prices of goods are also the basis of wages. For the individual producer, his reward is direct: society grants him profit for his goods by purchasing them in the market. He is able to pay more for his labor as well, and as such the reward of the laborers who assist a producer is also derived from amount society is willing to give for the goods that his labor helps to produce. (EN: There's a gap here in that wages are not necessarily set by prices - they are often agreed upon before the work is done, and before the profit is taken, so the master gains an entrepreneurial profit or takes an entrepreneurial loss if he offered his workers too little or too much based on his predictions of revenue.)
An exception is noted: those who produce raw materials from nature are often given a bounty or a beating by nature itself. The farmer does not control the weather, and may find that he harvests more or less from his fields by virtue of the amount of rain that falls, which is not under his control. Likewise the hunter may return empty-handed, the rancher may find his livestock reproduce more or less, the fisherman cannot predict his catch, the miner does not know how rich a lode he may strike, and so on. All make predictions based on their knowledge and experience, but face some uncertainty at the potential for an equal amount of effort to produce more or less profit.
There has been an evolution in the productivity of mankind, from isolated families that produce for the consumption of their own households to villages and cities in which men are divided into professions that perform very specialized work and engage in trade with one another. We have long noticed that the more urban an area, the greater the wealth of its people, as a result of greater specialization of production.
There's a digression about property rights: that societies of the author's time (or of any time) cannot exist unless people are secure in their property. Where the product of one's work is in jeopardy of being seized there is little sense in producing more than is needed for immediate consumption. Where even the means of production are in jeopardy, there is little incentive to create capital goods - a person who takes the trouble to plant a field means to harvest the crop that will be produced. If he expects his crop will be seized, he has no motivation to plant it in the first place. This goes back to the basic principle: man is motivated to produce by his desire to consume - and where his consumption is likely to be prevented, his motivation to produce is diminished.
And so it follows that a society must be secure in its possessions in order to be productive beyond a subsistence level. All land must have an owner if it is to be used productively, and society must defend the owner's right to use his land. He must likewise have ownership of the tools and materials he requires to produce. He must likewise be secure in the possession of the product he will create. It is politics that keeps many nations impoverished.
It is in the best interests of all that the land of a society be employed to their greatest productivity, and it is again the marketplace that determines this: if a plot of land can be used to generate significantly more profit than its current producer makes of it, then the entrepreneur can offer the present owner more than he could make by using his land. And while there are sentimental reasons that a man might choose to hold his land and use it in an inefficient manner, over time the will of the customers wins out and he or his heirs will sell it to those who can make the best use of it. One does not find wheat-fields in the middle of great industrial cities.
The same can be said of any material: the tanner sells a skin to the producer who offers more for it, and when society wants leather coats more than leather shoes, the tailor outbids the cobbler. And further, the same can be said of labor. If society wants iron more than it wants wheat, then the miner can offer a higher wage than the farmer, and get the workers he needs to supply society with what it most desires. So aside of his ability to produce more and/or better goods than his competitors, a producer grows wealthy by producing what is most wanted in his society.
These same factors help to divide the profit of production among the many hands involved. Society's demand for shoes rewards the herdsman who raises stock, the tanner who prepares their hides, and the cobbler who fashions the shoes. But just as customers bud for the cobbler's product, the cobbler bids for the tanners product, and the tanner bids for the herdsman's product. A cobbler must give a greater portion of the profits to a tanner who produces better quality hides, but he must give less if there are a greater number of tanners making hides than society ultimately demands. And again, the same is true of labor: the tanner must pay a skilled apprentice more than an unskilled one, and less if there is a surplus of laborers vying to assist him.
There is a brief consideration of the capitalist class - the landlord and the banker, each of whom has possession of something that others need to be productive, and who profit by providing it to the producers for rent or interest. The capitalist does not profit (or exist) because of his productivity, but by that quirk of law that provides for property rights: he has possession of a thing that someone else needs to use to be productive, and demands a share of the profit for letting them use it. This causes some to regard the capitalist as a "barren class" - but as was stated before, property must be respected in order for men to be productive - and the notion that something may be seized simply because it is not being used in a manner that someone else considers to be productive leads to barbarism: it is the will of the people that enables the producer to earn a profit, and by that will gives the producer the ability to pay rent or interest to have the use of the materials he needs to be productive. Moreover, the producer has no more right than the capitalist: while the land cannot be productive without a producer to work it, the producer cannot be productive without land to work, and to have it he must bargain with its owner to purchase or rent the land he needs. In this way the capitalist performs the service as arbiter for the use of scarce resources: the producer who can make the best use of resources can pay the most to have use of them.
Then, there is a consideration of producers who do not perform the hands-on effort to create goods. These are conductors or managers of workmen, who labor upon the goods themselves. They direct the effort of the workers and also ensure that they are faithful to their employer (they fulfill their agreement to perform labor and do not simply carry off his property).
Because of the time in which the book was written, there follows rather a long passage of the "abominable practice of slavery" and how slave labor figures into production (EN: I'm skipping it as it's no longer germane to present-day economies.) He also speaks of "partial colonialism" or share-cropping, in which tenants were offered the use of the land for a share of the profits of the crops they raised on it, which is a situation analogous to rent, but which was often involuntarily imposed on the tenant, who was treated as a serf or indentured servant. (EN: Another situation that is largely ended in the present day.)
In practice, there is little difference between hiring labor to farm and renting the land to others to farm except for risk and profit-sharing. The laborer's wages are guaranteed by the proprietor whether the activity is profitable, so the risk of loss or the potential for profit remains on the landowner. The proprietor's rent is guaranteed by the tenant regardless of whether the activity is profitable, so the risk of loss falls on the tenant. And when rent is variable, based on a share of the product of the endeavor, the risk is shared by both parties.
There is a brief observation that the potential to earn profit is attractive and results in more enthusiastic labor, as evidenced by comparison of farms in France that were cultivated by workers who share in the profit as opposed to those that are cultivated by workers who receive a fixed wage regardless of profit. He also mentions arrangements in which acreage is divided: the tenant labors or the entire property, but some of the fields belong to his landlord. Again, the fields he tends for his own profit are always better cultivated than those he tends for the profit of his landlord.
Returning briefly to the claims of parasitism, the landlord who leases his land to a tenant or the manager who hires laborers to do all the work is doing only a very little less than the owner who participates in the labor of farming the land. Because of his duties to oversee and direct the work of his hires, he does less actual work himself - and if the operation is of sufficient size, he is so occupied with oversight that he has no time to engage in menial labors and may need to hire other managers to assist him in the oversight of the operation. On a farm where there are two hundred workers, the proprietor who removes himself from the fields diminishes the work by half of one percent, which is negligible.
Here, he shifts to the capitalist, whose profit is made by lending money. This is essentially the same as leasing land (and in fact the money lent by the capitalist may be used to rent land from a proprietor). The capitalists loans money (or resources) to a productive endeavor and is repaid with interest. There are likewise arrangements in which the borrower pays a fixed interest on the sum or in which the capitalist claims a share of the profit - and this determines how the risk and reward of the operation are shared among collaborators.
The mercantile professions are similarly engaged to transport and exchange goods. Whether the producer hires a merchant to carry and sell his goods (and the producer takes the risk and keeps the profit) or whether the merchant purchase goods from the producer and bears the risk and takes the profit of marketing them is particular to the agreement. The service of transportation and barter are the merchant's service to society, and his profit is his reward.
There is some talk about market prices, but these are reflections of barter arrangements. Those who propose to trade wheat for wine come to some agreement about how many bushels of wheat are to be traded for how many bottles of wine. Where either party does not favor the deal offered, he will seek to deal with others until he finds a partner who meets his terms or adjusts his demands to be more realistic to what others are offering for his goods.
Where a market is monetized, this becomes difficult to observe as all goods are traded for money - but the same principle remains: the amount of money offered for a thing represents the amount of product (or whatever kind) that is being offered in exchange. To say that a bushel of wheat costs one coin and a bottle of wine costs two is an indication that the goods are exchanged proportionally: one bottle of wine for two bushels of wheat. Because of the myriad of goods in a market, this becomes abstract and obscured.
There is no fixed and universal exchange rate between goods - only a statistical analysis of what the individual buyers and sellers were willing to accept in exchange. If one seller demands two bushels of wheat for a bottle of wine and the next demands four, we can abstract the average cost of wheat as being three bottles - but this also overlooks question of quality: a bottle of exceptionally good wine might command ten bushels of wheat where a bottle of standard wine might command only four. And because wheat is not a commodity, the exchange tables become complicated: excellent, standard, or poor wine exchanged for excellent, standard, or poor wheat yields nine variations - and many goods have more than three grades.
Neither is the ratio of exchange fixed in all locations and at all times, as supply and demand also create fluctuations in the exchange rate: where there is a lot of wheat and many sellers, there is pressure to accept less wine in exchange, but where wine is more plentiful than wheat, the price of wheat rises. So there are day-to-day fluctuations in the exchange rates among goods - but even that is an abstraction, as the fluctuation is actually on the level of each individual trade.
He also touches briefly on the demand for money itself. Every item exchanged in a market is valued for the benefit it can provide: wheat is only worth something to the person who wants to eat it, and the price he offers reflects the poignancy of his desire to possess it. A staving man will pay much more for food than a well-fed man with a stocked larder. By the same token, money is only of value to those who have need of money: a poor man will give much labor to earn a single coin whereas a rich man will not inconvenience himself to pick up the same coin if it were lying in the street.
In that way, the price demanded by a supplier also reflects his desire for money. Once the farmer has sold enough wheat to cover his costs and turn a fair profit, he may still have wheat left to sell - and he will be inclined to demand less money because his need for money has been satisfied. He may even give away his stock to save himself the cost of transporting it back to the warehouse.
With this in mind it becomes clear that the abstractions and assumptions made by accountants and economists are insufficient to adequately describe reality: in their desire to make a grand and general pronouncement that "a bottle of wine is worth two bushels of wheat" they ignore the question of quality and quantity that has a significant impact on the trading prices of all goods. Simply stated, all such pronouncements are fictitious.
There's a diversion about the substance of money - how different societies use different commodities as money (tobacco leaves, cowry shells, salt, or whatnot) and the reasons that precious metals are particularly fit for use (low weight to value, durable, etc.). How the use of metal as currency has skewed its value as a commodity, and how the bimetallic system creates problems when the values of the metals fluctuate independently, etc. (EN: It's good material but has been dealt with more exhaustively elsewhere.)
The use of money has one significant dysfunction: it encourages meaningless accumulation. A farmer would not overwork himself to produce more food than his household could consume before it rots, but he will labor tirelessly to amass as much money as he can because it never rots and is good for many purposes. It is this "love of money" that is the root of many evils.
There is also mention of the preference for wealth to circulate, which is another reason that hordes of money are seen as harmful. (EN: Other economists have addressed this and concluded that it is of no concern. When all the gold was removed from Europe, people traded in silver, and if all the silver should disappear into hordes, the will trade in something else. It is not money but the existence of goods that are desired for consumption that fuels economic activity - but again, "economic activity" is not good in unlimited amounts. There need only be as much activity to provide people with what they need and want.)
Production requires capital in advance. The customer does not give revenue to the producer until the good is delivered - and the good must be made before it can be delivered. Therefore the producer must outlay capital to purchase materials and pay labor before receiving the revenue for its sale. Revenue returns the cost of production, but does not provide it. Before credit, production was restricted to those who already had sufficient capital to fund it. Only a man who had wealth could purchase materials and labors to make goods and generate more wealth. Credit allows the producer with no assets to be productive.
The author speculates about the earliest economic evolution of mankind: primitive tribes of hunters and gatherers became herdsmen and farmers. To engage in farming or herding, an individual must first amass enough food to survive while crops and livestock are growing. The first laborers were those who were not successful enough at hunting and gathering - they could not sustain themselves and depended on others to feed them (immediately) and direct their activity so that they could produce food for themselves in future. The earliest leaders did not rule others by brute force, but by virtue of their knowledge of productivity.
Back on topic: all property that has consumption value also has exchange value. The farmer who produces wheat can consume it or trade it to others for things he would rather have. The wise farmer did not trade away food he needed to survive for baubles, and the wiser farmer would not trade the grain he needed to seed next year's crop. But where someone offers more to the farmer for the use of his land than he could make by farming it himself, the wise move is to become a landlord. And this is socially useful - as the person who can make better profit of the land is the better farmer (because he can produce more), or his purpose is more wanted by society than the purpose the farmer had in mind (evidenced by their willingness to pay more).
Those who wish to consume something and those who wish to use it in production are both bidders in the market for that item. This is most evident in the market that determines land prices, as land may be use for many things: one can build a house upon it, farm it, raise livestock on it, harvest timber from it, dig a mine into it, build a factory upon it, build a theater upon it, or have it for leisure recreation as a park.
What resolves this conflict is the bidding in the market: whomever can make the most productive use of it, or whomever has the greatest desire to possess it for consumptive use, "wins" the right to use the land as they see fit by virtue of their willingness to pay to possess it. However, to be more precise, the cost of any item is not based on the actual use of it, but the anticipated use of it - as the farmer purchases the land before he sows his crop and sees the revenue of his first harvest.
(EN: Interestingly, this is often a cause of political strife in society - where those who wish to dictate how land may be used, but do not have the means to purchase it - engage the state to threaten the owner into accepting their direction and restrictions.)
He jumps back to the topic of savings: whomever has produced more than he needs to consume has wealth that can be stored for future consumption, usually in the form of money. That is to say that he has either been smart and industrious in his productive activity or reserved and disciplined in his consumption. These are generally considered to be virtuous qualities.
Wealth gives an individual power. Specifically, those who wish to have his wealth must bargain with him to get it - he is able to purchase goods and services with the capital he has saved from his past activities. (EN: This is an important point in cultures where wealth is viewed with suspicion and contempt: money can only buy what is for sale from a willing seller.)
It's then mentioned that one of the main uses for wealth is production. The apprentice who has saved enough of his salary may purchase the things he needs to be his own master: a shop, tools, and materials. The farmer who has made enough profit from last year's crop can use his wealth to rent or buy more land, to hire more workers, to produce more in the following season. And because money is flexible it can be used to enter into any enterprise: the farmer may establish a sawmill or a haberdashery or some other form of productive operation.
He returns to the specialization of labor: it requires the cooperative work of many hands to furnish goods to the market, even in the author's time. To furnish meat requires a butcher, but also someone to raise livestock to be butchered. It requires someone to forge knives, to mine the ore from which knives are forged, to dig the coal that fuels the furnace, etc. Each of these activities requires an initial infusion of capital, to be laid out before the operation can produce any product and receive any revenue. It is here that the capitalist furnishes the means by which a producer may establish a productive operation.
While it has been said that the product of an enterprise does not yield revenue until it has been produced, this does not mean that the revenue is received the moment that raw goods become a consumable object. The customer decides not only what he wishes to have, but where and when he wishes to take possession of it - so in many instances the producer's finished goods must be transported to the place a customer might want it and held until the very time the customer wishes to purchase it. This adds to the risk of production, as goods may be lost, damaged, or decayed during transportation and storage, and it also adds to the capital needed to undertake a productive activity.
There is mention of the mercantile profession, who transport and store goods between the producer and the consumer. While these "middlemen" are often reviled for adding to the cost of goods, they are of service to the consumer (saving him the effort of traveling to the place where a desired good is produced) as well as the producer (providing revenue in advance of sale and absorbing the risk of loss or damage between the place and time of production and consumption).
This mercantile class has done much to benefit producers and consumers. Through most of history consumers could only obtain goods produced in their local area and producers could only sell to nearby consumers. By degrees, the merchants have enabled goods to move from town to town, kingdom to kingdom, and continent to continent, enabling consumers in Europe to enjoy the product of China and America and producers in Europe to sell their goods around the world.
The mercantile class has also provided rewards for efficient and specialized labor. Consumers are not beholden to pay higher prices and accept lower quality from local suppliers if cheaper and better goods can be brought to their local market from more distant producers. And while the availability of cheap imports rankles local producers, it encourages them to be more efficient in their own operations or find products that they are better capable of making in the quality and prices consumers want.
The notion that the merchant profits by cheating both producer and consumer is a fallacy. The profits of the merchant are gained at the loss of no-one, save the inefficient producer. His effort is the knowledge of where goods can be bought cheaply and sold expensively - but those from whom he purchases goods get a better profit from him than others and those to whom he sells get goods at a lower cost than they could from others. And in many instances the merchant provides goods to customers and revenue to producers that neither would have but for his services.
The idea of the circulation of money reflects the path by which a coin (and the value it represents) constantly passes from one hand to another. The coin passes from customer to seller when he purchases goods, from the seller to the producer to purchase inventory, from producer to supplier when he purchases materials and labor, and the laborer who earns that coin returns it to the market to purchase goods again.
In another sense, money circulates through a productive operation: the money paid to purchase materials and labor to plant the field in spring is returned when the produce is harvested and sold in fall, and then paid out again to re-plant the following spring. While manufacturing operations are less subject to the seasons, their cash flow is similar, with revenue financing production to gain revenue to finance more production. What is paid out in wages is spent on other goods in the marketplace and returns as revenue.
(EN: there's a great deal of hair-splitting about the timeline. It's not accurate to say that revenue pays the costs of production because the costs are paid before revenue is received. Instead, it's more accurate to say that revenue returns the money that was advanced for production, which is most obvious when money is borrowed to produce and the loan repaid from sale of product.)
The money-lender is another individual who is often unappreciated. He is seen as a parasite who contributes nothing to production but demands a share of the product. While he furnishes no materials or labor, he instead furnishes the capital necessary for producers to obtain materials and labor to be productive. They are certainly not reviled when the farmer needs money to purchase the means to plant a crop, but are resented when they present the demand to be repaid when the harvest is made. The interest charged on loans also represents the risk that the lender undertakes that the crop would fail and he would not be repaid. In essence, the several producers who borrow from a lender are paying insurance against their own failure.
It is also a mistake to believe that those who loan money may name any interest that they wish to have - the borrow must agree to pay a rate of interest, and if a better rate can be had from another lender, he will borrow elsewhere. If the cost of interest exceeds the profit of an undertaking, the rational producer would not take any loan - and would not produce because production cannot cover its expenses. If the interest offered by borrowers is insufficient to cover the risk of making a loan, the lender refuses to make the loan. As in all matters, the price of a loan (its interest) is subject to negotiation between buyer and seller, and both have the ability to refuse to the transaction if it is not sufficiently favorable.
Turgot emphasizes that the negative views on interest are theological in nature, and are not based on any logical standard. Moreover, theologians are not of a single voice: some are more reasonable about the subject of borrowing and lending with interest, though they are generally admonished for this. Ethically a loan is the same as any other contract, into which two parties enter willingly and fully aware of the terms, and so long as the agreement is kept, it cannot be said that one has taken advantage of the other. There are instances in which lenders have taken advantage of borrowers and vice-versa, but these are far less usual than the moralists would have us believe.
There's a bit more on lending: that a man should be able to lend his money in the same way he should be able to lend his land, his tools, his labor, or any other possession to another, asking in return some compensation for his own risk and inconvenience. (EN: From here, he lurches back to theology and the questionable interpretation of scripture, which is of little interest: faith is impervious to logic.)
He then considers the compromise of usury - in which loans of money are tolerated but the interest collected on loans is capped at a certain amount, above which a loan is considered unlawful. The interest charged on money is like the rent charged on land, or the price of any good: it should be set by the market. Where an arbitrary low price is set on a good, the result is that producers refuse to furnish it and instead invest their effort elsewhere. So when the interest on loans is capped, then producers refuse to lend to those borrowers who would justly be charged more interest for the risk - such as those establishing new undertakings.
The man of business seeking to engage in commerce is generally concerned with finding an enterprise on which he can make the most for his investment, and even when he is engaged in an enterprise he considers whether it is in his favor to continue in that line of business or switch to another. In terms of lending, an investor is caused to consider whether he could make the best return on his capital by putting it to work himself or lending it to someone else who can make better use of it. It is in this sense that capital markets direct money to where it is most needed by a society: it goes to the producers who can most efficiently make the things that the consumers most greatly desire. Where there is any interference in the market, it can only result in rewards going to less efficient producers whose goods are less desired by consumers.
There's a brief reminder that markets are global whereas governments are local. If the government of France prevents lending at a rate that is attractive, those who have money (silver and gold) will simply remove their assets from the French economy to finance productive operations in England - to the profit of English producers and the benefit of English customers.
There is a brief and rather confusing consideration of "luxury" and whether the leisure class are helpful or harmful to the economy of a nation. This argument is often made from a position of avarice - those whose frustrated lust for wealth turns them into critics of those who have succeeded at becoming wealthy. We must recall that people who have wealth earned it at some point - their wealth is their reward for producing things that people wanted enough to give them money in exchange. And we must consider that whatever extravagant and foolish uses they make of their wealth gives income to others for providing their amusement. In all it is a balance - they can spend only what they have earned, and get from a society in equal measure to that which they have given.
Here, there is a recap of the methods by which money can be productively employed:
- To spend money in cultivation and manufacturing (operations that render consumable goods)
- The spend money in commerce (operations that transport and resell goods)
- To invest money in a productive operation (cultivation, manufacturing, or commerce) that someone else operates
- To spend money to acquire factors of production (land/equipment) that can rented out to others for productive use.
- To lend money directly to others who can make productive use of it.
Turgot considers how different uses provide different levels of profit and entails different levels of risk - but there is no fixed rule as to which method of employment is the most profitable because it depends on the demand for finished goods and the supply of the means of producing them.
It is a common practice to consider the current rate of interest for the lending of money to be the standard by which other uses of capital are assessed: where a better return can be had by a given pursuit than by lending money, then that pursuit is considered to be "profitable." It is likewise common practice to consider risk in enterprises to that of lending money - if the risk of an operation is less than the risk of default on a loan of the same amount over the same period of time, it is considered a "safe" investment.
The significance of this comparison is in the motivation of producers in an economy to undertake productive enterprises. The interest rate of lending fluctuates in different locations and at different times, so an enterprise that was not worth undertaking at one place and time (because it was less profitable and more risky than lending money) seems worth undertaking in a different time and/or location (because the difference in the interest rate makes it more profitable and less risky).
The capital of a nation consists of the value that is generated from the land of that nation as well as the value of the productive assets within that nation. Under no circumstances should the national capital include its supply of money: money is a token of exchange with no intrinsic value as a productive asset - the things that can be purchased for that money have already been counted, and while things may be purchased from overseas and brought into the country, those assets are outside of the nation (and are the productive capital of another nation). Likewise the amount of unpaid debt is to be included - future payments represent money, which is again a token of exchange within an economy.
(EN: This makes sense on the scope of a nation or market where goods are traded among different parties who are members of the same group. For a person or a company, money and accounts receivable represent the ability to bring assets into their possession/accounts from an outside source. That is, my money creates value for me, but from the perspective of the market that value is moved from one person to another inside the same group.)
There is then the consideration of the various tasks involved in the wealth of a nation, largely as a counterpoint to the prevailing view that considers only those who are involved in the creation of things contribute to the market. Transporters, retailers, financiers, and others work in supporting roles - and while they are considered to be "non-productive" their activities facilitate production. In all instances a producer would be significantly impaired or distracted from creating goods if he had to tend to these tasks himself, and in some instances production would be impossible without this support and assistance.
There are a few closing paragraphs that defend the work of the financier and the merchant, who are wrongly cast as parasitic by those who misunderstand their role and who fail to realize how detrimental it would be to production. There is also an oblique defense of similarly reviled individuals - the landlord and the employer - whose contributions to production are also poorly understood. It is in fact because of the contributions of these peripheral roles that the quality of life in advanced nations has risen above the level of primitive tribes.