Changes

[[Adam Smith]] described the operation of capital accumulation through the productive powers of labor as such,

[[Adam Smith]] described the operation of capital accumulation through the productive powers of labor as such,

{{Cquote|Whatever a person saves from his [[revenue]] he adds to his [[capital]], and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book II, Chapter 3, Paragraph 15,] ''Of the Accumulation of Capital, or of Productive and Unproductive Labour'', First Edition 1776.</ref>}}

{{Cquote|Whatever a person saves from his [[revenue]] he adds to his [[capital]], and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits. As the capital of an individual can be increased only by what he saves from his annual revenue or his annual gains, so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same manner. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN.html Book II, Chapter 3, Paragraph 15,] ''Of the Accumulation of Capital, or of Productive and Unproductive Labour'', First Edition 1776.</ref>}}

Real wealth consists not in money, but in the things money will exchange for,

Real wealth consists not in money, but in the things money will exchange for,

{{Cquote|In order to put industry into motion, three things are requisite; materials to work upon, tools to work with, and the wages or recompense for the sake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth; not in the metal pieces, but in what can be got for them. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 2, Paragraph 37,] ''Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital '', First Edition 1776.</ref>}}

{{Cquote|In order to put industry into motion, three things are requisite; materials to work upon, tools to work with, and the wages or recompense for the sake of which the work is done. Money is neither a material to work upon, nor a tool to work with; and though the wages of the workman are commonly paid to him in money, his real revenue, like that of all other men, consists, not in money, but in the money's worth; not in the metal pieces, but in what can be got for them. <ref>Adam Smith, ''An Inquiry into the Nature and Causes of the Wealth of Nations'', [http://www.econlib.org/library/Smith/smWN7.html Book II, Chapter 2, Paragraph 37,] ''Of Money Considered as a particular Branch of the General Stock of the Society, or of the Expence of Maintaining the National Capital '', First Edition 1776.</ref>}}

Since wealth does not consist in money, gold, or silver, and labor is the original purchase price, Smith explains how the capitalist system is then put into motion, complete with natural incentives, only Smith does not use the word "capital" here to describe what is needed.  Smith explains how a "store of goods", or "stock sufficient to maintain" the original capitalist entrepreneur is necessary;

Since wealth does not consist in money, gold, or silver, and labor is the original purchase price, Smith explains how the capitalist system is then put into motion, complete with natural incentives, only Smith does not use the word "capital" here to describe what is needed.  Smith explains how a "store of goods", or "stock sufficient to maintain" the original capitalist entrepreneur is necessary;

{{Cquote|When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.  

{{Cquote|When the stock which a man possesses is no more than sufficient to maintain him for a few days or a few weeks, he seldom thinks of deriving any revenue from it. He consumes it as sparingly as he can, and endeavours by his labour to acquire something which may supply its place before it be consumed altogether. His revenue is, in this case, derived from his labour only. This is the state of the greater part of the labouring poor in all countries.  

The [[division of labor]] is the necessary condition that gives rise to the productive powers of labor that allows for large scale economic growth.  By "division of labor", Smith is referring to "specialization of labor", where each worker acquires specific knowledge to apply to a specific task.

The [[division of labor]] is the necessary condition that gives rise to the productive powers of labor that allows for large scale economic growth.  By "division of labor", Smith is referring to "specialization of labor", where each worker acquires specific knowledge to apply to a specific task.

{{Cquote|In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides everything for himself, it is not necessary that any stock should be accumulated or stored up beforehand in order to carry on the business of the society. Every man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.  

{{Cquote|In that rude state of society in which there is no division of labour, in which exchanges are seldom made, and in which every man provides everything for himself, it is not necessary that any stock should be accumulated or stored up beforehand in order to carry on the business of the society. Every man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.