Essay No. 156:

Capital Is Only The Fruit Of Labor, And Could Never Have Existed If Labor Had Not First Exerted: According to the preposition, labor is the primary factor of production. Capital enjoys a secondary position to labor. As a matter of fact, production is the result of four factors of productions, namely land, labor, capital and organization. Four factors enter into the process of production to produce consumer as well as capital goods. Production or GDP is the result of the four factors of production listed above.

There is relationship of mutuality between labor and capital. It is rather difficult to say that capital is the result of labor. It is like hen-egg riddle. All that can be said is that labor helps create capital, while the latter provides increasing opportunities of employment to labor in an expanding capitalist economy. Hence it is better to avoid the controversy.

Karl Marx, to all intents and purposes belonged to the classical school of thought. However, he was of the view that labor creates surplus value, which is usurped by the capitalist since only a small portion of the value goes to labor in the form of subsistence wages, the minimum level necessary for the survival of labor.

Marx thus presented the concept of exploitation of labor in a capitalist economy. Economists later on rejected the concept of surplus value on certain technical grounds. Without indulging in the polemics, we may say that both labor and capital when combined together in an optimal way result in the production of different types of goods, for meeting the variety of wants of consumers.

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The proposition entangles reader in circular reasoning. It is better if one were not lost in the controversy whether labor came first and vice versa. The question that arises in one’s mind in how labor could be put to use if there was no capital. It is the capitalist or organizer who hires labor for purpose of producing variety of goods, which receives wages in its turn.

Wages are determined on the basis of productivity or efficiency of labor. One should thus not get stuck up in the controversy. It is therefore logical to say that both are distinct factors of production, which employer hires to produce variety of goods in a country in order to satisfy the wants of consumers.

“Capital Is Only The Fruit Of Labor, And Could Never Have Existed If Labor Had Not First Exerted”