# II: The Meaning of the Terms explained — Progress and Poverty

> Chapter companion for Progress and Poverty by Henry George.

## What happens

This chapter defines wealth and capital in political economy, distinguishing actual wealth (tangible products of labor) from relative wealth (debts, land values, slaves). It critiques common misconceptions and reviews definitions by Adam Smith, Ricardo, McCulloch, and Mill, ultimately clarifying that capital is a subset of wealth devoted to production.

## Themes in this chapter

### Distribution of Wealth

The chapter distinguishes actual wealth from relative wealth (e.g., land values, debts) that represent claims on production, highlighting how ownership affects distribution.

### Wages and Labor

Wealth is defined as labor impressed upon matter, and capital as wealth aiding production, linking labor to the creation of tangible wealth.

## Character check-ins

### Unknown

The narrator defines wealth and capital, critiques vulgar errors, and reviews definitions from leading economists.

### Adam Smith

Mentioned for counting personal qualities as capital, an error inconsistent with his own definition.

### David Ricardo

His definition of capital is discussed and compared with others.

### John Stuart Mill

His definition of capital is referenced and explained.

## Key lines

> All things which have an exchange value are, therefore, not wealth, in the only sense in which the term can be used in political economy.

Not everything with a price tag is true wealth in economic terms.

_The narrator clarifies that only tangible products of labor count as wealth._

> Wealth is not the sole object of labor, for labor is also expended in ministering directly to desire; but it is the object and result of what we call productive labor—that is, labor which gives value to material things.

Labor can serve desires directly, but only when it adds value to physical objects does it create wealth.

_Distinguishes productive labor from services._

> Capital is only a part of wealth—that part, namely, which is devoted to the aid of production.

Capital is a subset of wealth used to help produce more wealth.

_Defines the relationship between wealth and capital._

## Links

- HTML: https://www.betterreads.online/discover/progress_and_poverty_se/chapters/ii-the-meaning-of-the-terms
- Book: https://www.betterreads.online/discover/progress_and_poverty_se
- All chapters: https://www.betterreads.online/discover/progress_and_poverty_se/chapters