812 B
812 B
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