An Institutionalist Before Joan Robinson

"...An eminent professor of law once defined the legal mind in this way. If, he said, there are two things so closely related that one cannot be conceived except in terms of the other, but if you can think of one without thinking of the other, then you have a legal mind. In somewhat similar fashion it might be said that if two things are utterly and completely distinct, but if you nevertheless think of them as being identical, then you have an economic mind...

...This is the idea of capital. Unfortunately for all of us, it is quite false. As everybody knows, the progress of any society depends upon its ability to enlarge the productive apparatus of the community...But since money will buy anything in commercial society, those who control accumulations of money are in a position to buy and control the increasing productive apparatus that spells progress. Therefore, it seems that money is the instrument of progress...

...Some people call it nature, but others call it capital. Even in early modern times industry was growing fast. That growth was a function of the industrial equipment of the community, as anybody could see even in early times. To identify that function with the accumulation of money was to attribute the whole thing to the men who made money. This is what we accomplish by calling both things 'capital.' The argument runs as follows: Economic progress results from the growth of the material equipment of industry, that is to say, capital; capital, that is to say, money, is created by 'saving'; therefore economic progress is made possible by 'saving.' In this fashion the money power became functional.

...The double-talk of capital has become an ingrained habit. It runs through virtually every textbook. Textbook writers solemnly warn their students of confusion which lurk behind this word. Resolutely they insist that it must be used to refer to one thing or the other, and not both. With exemplary clarity they declare, for example, that they propose to use it to refer only to the physical equipment of industry: plant, machines, raw materials, and so forth. And in the very next paragraph we find them saying that capital is brought into existence by saving! But now, obviously, they are talking about money!

That is how it is done." -- C. E. Ayres, The Divine Right of Capital (1946)