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A TREATISE ON MONEY

BE. Ill

to the available output, plus subtractions from, orminus additions to, stocks of liquid consumers’ goodswhich we shall call “ hoards ” ; and current invest-ment must be equal to the non-available output plusadditions to, or minus subtractions from, hoards.Thus consumption is governed by the amount of theavailable output ( plus any drafts on hoards), not bythat of the total output; whereas—so long as themoney-rates of remuneration of the factors of pro-duction are unchanged—the money-income of thecommunity tends to move with the total output.

(iii.) The Classification of Capital

The stock of Real Capital or material wealth exist-ing at any time is embodied in one or other of threeforms :

(1) Goods in use, which are only capable of givingup gradually their full yield of use or enjoyment.

(2) Goods in process, i.e. in course of preparationby cultivation or manufacture for use or consump-tion, or in transport, or with merchants, dealers andretailers, or awaiting the rotation of the seasons.

(3) Goods in stock, which are yielding nothing butare capable of being used or consumed at any time.

We shall call goods in use Fixed Capital, goods inprocess Working Capital , 1 and goods in stock LiquidCapital.

Working Capital is necessary because some goodstake time to produce ; and Fixed Capital is necessarybecause some goods take time to use or consume.Liquid Capital is only possible when goods will“ keep ”.

There is, of course, no sharp line of division betweenfixed and liquid goods ; we have a continuous series,

1 A more detailed definition of Working Capital will be given in Volumeii., Chapter 28.