The Factors of Production
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 see at once that nothing properly included under either one of these terms can properly be classed as capital.
Land
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, for it is only by having access to land, from which his very body is drawn, that man can come in contact with or use nature.
The term land embraces, in short, all natural materials, forces, and opportunities, and, therefore, nothing that is freely supplied by nature can properly be classed as capital. A fertile field, a rich vein of ore, a falling stream which supplies power, may give to the possessor advantages equivalent to the possession of capital, but to class such things as capital would be to put an end to the distinction between land and capital, and, so far as they relate to each other, to make the two terms meaningless.
Labour
The term labour includes all human exertion. Hence human powers whether natural or acquired can never properly be classed as capital. In common parlance we often speak of a man's knowledge, skill, or industry as constituting his capital; but this is evidently a metaphorical use of language that must be eschewed in reasoning that aims at exactness. Superiority in such qualities may augment the income of an individual just as capital would, and an increase in the knowledge, skill, or industry of a community may have the same effect in increasing its production as would an increase of capital; but this effect is due to the increased power of labour and not to capital.
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 are neither land nor labour but have resulted from the union of these two original factors of production. Nothing can be properly capital that does not consist of these; that is to say, nothing can be capital that is not wealth. But it is from ambiguities in the use of this inclusive term wealth that many of the ambiguities which beset the term capital are derived.
Henry George Progress and Poverty, Chapter 2
