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# Agricultural Capital Structure

## Definition

The ownership and organization of financial resources used in farming, including whether capital is provided by landlords or farmers themselves, which Smith argues fundamentally affects incentives for improvement and the overall efficiency of agricultural production.

## Source Chapter

Book III, Chapter 2

## Context

Smith analyzes how different capital structures create different incentive systems, showing that when landlords provide all capital (as with slaves or metayers) they capture all gains from improvement, while when farmers invest their own capital they have direct incentive to maximize returns through better management and innovation.

## Economic Domain

Production

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