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# Capital Decay Through Excessive Consumption

## Definition

The process by which a nation's productive resources are diminished when annual consumption exceeds annual production, forcing society to consume its capital stock to maintain current living standards, leading to long-term economic decline.

## Source Chapter

Book IV, Chapter 3

## Context

Smith warns that when expenses exceed revenue, capital must necessarily decay, and this principle applies to nations as well as individuals, making sustainable consumption levels essential for long-term prosperity.

## Economic Domain

Accumulation

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