Labour and Capital

Money is not only a means of exchange but is also a means of measuring the value of men's labour. In economic theory, 'labour' is any work undertaken in return for a fixed payment. The work undertaken by a mother in caring for her children may be hard work, but it receives no fixed payment. It is not therefore labour in the strict economic sense.

As a scientist, the economist is interested in measuring the services which people render to each other. Although he is aware of the services which people provide for no financial reward, he is not conerned with these services. He is interested essentially in services which are measurable in terms of money payments of fixed and regular nature. In economics, money is the standard by which the value of things is judged. This standard is not a religious or subjective standard, but an objective and scientific one.

Human labour produces both goods and services. the activities of a farmworker and a nurse are very different, but both are measurable in terms of payment received. Labour in this sense in not concerned with distinctions of social class, but simply with the payment of wages in return for work. When we talk about 'the national labour force'. However, we are thinking of all those people who are available for work within the nation, i.e. the working population.

It should be noted that any person engaged in private business is not paid a fixed sum for his activities. He is self-employed and his activities are partly those of an employer and partly those of an employee. If however he employee provides labour in return for payment. He receives his wages, while his employer receives the surplus (large or small) from the whole business. This surplus is the reward of private enterprise and is known as 'profit'.