§7. Capital Value

Savings bring us to the nature of capital. Capital, in the sense of capital value, is simply future income discounted or, in other words, capitalized. The value of any property, or rights to wealth, is its value as a source of income and is found by discounting that expected income. We may, if we so choose, for logical convenience, include as property the ownership in ourselves, or we may, conformably to custom, regard human beings as in a separate category.

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I define wealth as consisting of material objects owned by human beings (including, if you please, human beings themselves). The ownership may be divided and parcelled out among different individuals in the form of partnership rights, shares of stock, bonds, mortgages, and other forms of property rights. In whatever ways the ownership be distributed and symbolized in documents, the entire group of property rights are merely means to an end—income. Income is the alpha and omega of economics.