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# Encroachment Upon Capital

## Definition

The process by which individuals who spend beyond their income consume their
capital stock, perverting funds consecrated to productive employment for
maintaining unproductive labour. This diminishes the quantity of labour that
adds value to subjects and consequently reduces the real wealth and revenue
of the country's inhabitants.

## Source Chapter

Book II, Chapter 3

## Context

Smith describes how prodigality leads to capital consumption, comparing it to
perverting revenues of pious foundations to profane purposes, and showing how
this behavior impoverishes both the individual and the country.

## Economic Domain

Accumulation

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