If economic value is the freedom arising from effective human effort, in the medium of matter, then there are only two basic contributing agencies mathematically involved in its measurement: one is the prime impulse which springs from need or inducement; the other is resistance.
However, if we desire to take advantage of scientific procedure in the art of measurement, we must be able to state both impulse and resistance in terms of common dimensions before the resulting value can be measured. These dimensions, or limits, are human effort, area and time, which express potential motive-force; and loss-of-human-effort, area and time, which express resistance.
The surprising fact is that such a contention is only novel in one branch of science—the so-called science of economics.
The economists usually state that land, labor and capital are the elements of economic value; but, from a scientific standpoint, capital can be resolved into several basic factors, and to consider it as an element is to maintain the confusion which it introduces into all calculations. Superficially everyone is agreed that land and labor are basic elements; let us consider then what capital is, so that we can dispose of its primary claim. The usual example given by the political-economists is that if a man is about to commence any operation, he has to consider three basic costs, namely, rent, wages and interest. For the sake of argument let us assume the following:
Rent is the value bid for land-area per unit of time.
Wages are the value bid for human effort per unit of time.
Interest is the value bid for money (or certified value) per unit of time.[1]
Now let us suppose that capital is not available, as is often the case outside the economic textbooks; how shall it be created if it is essential? Obviously by the operator in question applying his own labor per unit of time, directly or indirectly, upon land, consuming less than he produces, as does the persistent leaser in preparation for a farm of his own. He pays rent and
- ↑ It seems pertinent to point out that Taxation, the value bid for order per unit of time, is not included by the ritualists; and that what they call rent is often the payment for depreciating goods; but let us withhold these exceptions for the time being. Compare page 135 et seq.
