The Meaning of the Law of Markets Can Be Understood ONLY through Mill's Definition of Capital

But to understand Mill's meaning with regard to Say's Law fully, it is necessary to turn to Book I, Chapter V, Mill's famous chapter on ‘Fundamental Propositions Respecting Capital.’ Indeed, the appropriate place to start is the discussion on the meaning of capital in the previous chapter (Book I, Chapter IV) because, as with the essay, it is only through following Mill's definition of capital that the meaning of the law of markets can be understood. Capital, according to Mill, is everything and anything an entrepreneur intends to utilise to earn income. There is nothing intrinsic in an item which makes it capital, but only the intention of its owner. Capital includes not only all tangible goods, but also money and available lines of credit:

The distinction, then, between Capital and Not-capital, does not lie in the kind of commodities, but in the mind of the capitalist — in his will to employ them for one purpose rather than another; and all property, however ill adapted in itself for the use of labourers, is a part of capital so soon as it, or the value to be received from it, is set apart for productive reinvestment. The sum of the values so destined by their respective possessors, composes the capital of the country.

In Chapter V, Mill provides four propositions with regard to capital which are in his view fundamental for anyone wishing to understand the workings of an economy.

—Steven Kates, Say's Law and the Keynesian Revolution: How Macroeconomic Theory Lost its Way (Cheltenham, UK: Edward Elgar Publishing, 2009), 68-69.