The coupon arrives without requiring its owner to report for work. That is its attraction and the source of the suspicion it has always drawn: a sufficiently large stock can release one person from the daily necessity that continues to govern the people whose activity sustains the payment. The suspicion identifies a real difference between an income earned by working now and an income received because a claim is held. It leaves several questions unresolved. The claim may have financed productive equipment, purchased an inherited privilege, absorbed a risk, or passed to its present holder without effort. To judge the payment, one must follow both the service the asset provides and the history of the right to receive it. The coupon announces ownership; its justification requires a longer account.
The work of the owner and the work of the asset can come apart. A machine may help produce goods while its owner sleeps. A bondholder may have supplied funds that made its construction possible, although a later purchaser of the bond pays the previous holder rather than the builder. A secondary market can still matter to finance because an investor who expects to resell a claim may be more willing to buy it at issue. These connections explain possible services of capital and its markets. They do not turn every later payment into a wage for personal effort. Nor does the existence of a valuable claim establish that it represents newly produced equipment: claims can be written against existing property, public revenues or other claims. A household's asset and the productive stock of a country are different accounts.
The payment must also be separated into what maintains the asset and what ownership finally yields. In an invented annual account, a machine produces $100,000 in rental receipts, requires $40,000 of operation and maintenance, and suffers $20,000 of economic depreciation. The remaining $40,000 is the return after those costs. Suppose $30,000 is the return required to supply comparable capital bearing the same risk. On that assumption, the remaining $10,000 is economic rent above the stipulated opportunity cost. Change the risk, the replacement cost or the available alternative and that residual changes. The entire receipt is not disposable income, and the entire net return need not be a surplus obtainable without affecting supply. A classification of the owner as passive does not perform this decomposition for us.
Even a payment drawn from pure scarcity can give a later buyer only an ordinary investment return. Imagine a perpetual right to a secure $20,000 a year, with no expenses, no growth and a constant discount rate of 4 percent. Its price is $500,000. A buyer who pays that price receives the prevailing 4 percent; the valuable privilege has been paid for in the purchase price. This does not remove the scarcity from which the stream arises. It distinguishes the advantage of having acquired or created the right cheaply from the return on buying it at its capitalized value. A reform that reduces the expected stream may therefore fall on the current holder through the asset price, even when the holder's own purchase involved no windfall.
The word earned gathers several judgments that this accounting leaves separate. A worker may have saved the purchase price through years of effort. An heir may receive the identical asset. An entrepreneur may both manage a business and hold its equity, so that observed income mixes the return to work with the return to ownership. A pension fund may collect the same kind of payment on behalf of people who have stopped working after a lifetime of contributions. The economic character of the claim does not change whenever its holder's biography changes; the moral assessment may. Payment for an ongoing service, compensation for bearing uncertainty, a reward for an earlier contribution and a legal entitlement to a future stream each supplies a different reason. The ledger can distinguish them more readily than it can rank them.
Keynes proposed to weaken the rentier by making capital less scarce. In the closing chapter of the General Theory, he envisaged sustained investment and something approaching continuous full employment carrying the stock far enough that its scarcity return dwindled. The surviving charges would still cover replacement, risk, skill and supervision. This was a program for altering the terms on which ownership could command income. It did not require a machine to maintain itself for nothing, or an uncertain venture to become safe, or useful judgment to cease deserving payment. The object was the bonus that mere scarcity could give the owner once those functions had been distinguished.
The path to that result was conditional even in Keynes's own account. A falling rate might encourage consumption enough to leave accumulation short of the abundance he sought. Public investment and communal saving might then have a role, but the scale of the claim on the living generation remained a separate political decision. He acknowledged uncertainty about how people would react. Treating the passage as a prediction that every return must vanish through the unaided passage of time removes the choices on which it rests. There is no calendar in the arithmetic of accumulation that guarantees a society will produce just the capital, in just the quantities, that would dissolve every valuable scarcity.
Reproduction can erode some scarcities while leaving others intact. A second factory can compete with the first; making a second factory does not create another parcel at the same location. Nor does an increase in machines necessarily alter an exclusive right to a market. Even where entry is possible, additional production may require time, coordination and resources that have other uses. The expectation of a return can summon that supply, and the supply can reduce the return. The dynamic question is how far the process can proceed and what prevents it from proceeding further. A society can enlarge productive capacity while preserving particular positions from competition. Calling all their receipts the return to capital conceals the difference between scarcity being relieved and scarcity being maintained.
A low yield can coexist with a formidable fortune because the value of the claim moves with the rate. Return to the invented $20,000 perpetuity. At a discount rate of 2 percent its price is $1 million, twice the earlier value, although the annual payment is unchanged. Its old holder has a capital gain; its new buyer must pay more to obtain the same flow. This is a change in the price of a fixed claim, holding its stream constant. Keynes's abundance argument concerns changes in the underlying opportunities as well, so the example neither refutes nor proves it. It shows why a decline in a quoted yield, by itself, cannot establish that inherited economic position is fading. The stream, the price paid for it and the resources producing it have to be followed together.
The coupon proves a claim; its justice needs an account.
Living from ownership can be justified by reasons other than present labor, but those reasons must be shown rather than smuggled into the word earned. A claim may support investment, distribute risk and provide retirement security while still resting on an unequal initial endowment. A payment may be necessary under existing arrangements while those arrangements remain open to change. Keynes's durable challenge is to ask which part of the owner's return survives because society needs the service, and which part survives because the opportunity to supply it remains scarce. The answer will differ across assets and institutions. The coupon keeps arriving under the existing rules; the argument concerns why those rules should endure. The argument remains open.