Peter Stillman asks us to tell him how Henry George differentiated land  
from capital.  
  
Here is HG in _Progress and Poverty_ (1880), Book 1 ch.2, after  
reviewing the various definitions of capital in Smith, Ricardo,  
McCulloch, J S Mill, Wayland, Carey. Perry, Thornton, Francis Walker and  
Amasa Walker:  
   "The difficulties which beset the use of the word capital... arise  
from two facts -- first, that certain classes of things the possession  
of which to the individual is precisely equivalent to the possession of  
capital are not part of the capital of the community" [i.e., here George  
is warning us of the fallacy of composition: while land may appear as  
"capital" and "wealth" to the individual it is not part of the "wealth"  
of the nation -- the national product -- and an increase in the price of  
land does not increase the wealth of the nation]; "and, second, that  
things of the same kind may or may not be capital, according to the  
purpose to which they are devoted...  
   "Land, labour, and capital are the three factors of production. If we  
remember that capital is thus a term used in contradistinction to land  
and labour, we at once see that nothing properly included under either  
one of these terms can be properly classed as capital. The term land  
necessarily includes not merely the surface of the earth as  
distinguished from the water and the air, but the whole material  
universe outside of man himself... The term land embraces, in short, all  
natural materials, forces and opportunities, and, therefore, nothing  
that is freely supplied by Nature can be properly classed as capital...  
The term labour, in like manner, includes all human exertion, and hence  
human powers, whether natural or acquired can never be properly classed  
as capital...  
   "Thus we must exclude from the category of capital everything that  
may be included either as land or labour. Doing so, there remain only  
things [that George terms "wealth"] which are neither land nor labour,  
but which have resulted from the union of these two original factors of  
production...  
   "When we speak of a community increasing in wealth... we do not mean  
to say that there is more land... or that there are more people..., or  
that the debts or dues owing by some of these people to others of their  
number have increased; but we mean that there is an increase of certain  
tangible things, having an actual and not merely a relative value --  
such as buildings, cattle, tools, machinery, agricultural and mineral  
products, manufactured goods, ships, wagons, furniture, and the like.  
The increase of such things constitutes an increase of wealth; their  
decrease is a lessening of wealth...  
   "But though all capital is wealth, all wealth is not capital. Capital  
is only part of wealth -- that part, namely, which is devoted to the aid  
of production."  
  
I hope that is clear enough, and ever since I read this aged 18 it has  
seemed reasonable enough to me.  
  
James Ahiakpor asked me to tell him "what the difference between land  
and capital was that he thought I didn't know.  He didn't oblige my  
request.  I didn't think he would be inclined to suggest that capital is  
man-made while land is given by "nature."   That would be far too  
elementary, I thought."  
  
Yes, elementary, my dear James. Happy to oblige.  
  
Roger Sandilands