Meaning: The quote "That the powers of labour, and of the other instruments which produce wealth, may be indefinitely increased by using their products as the means of further production" by Nassau Senior, an economist, encapsulates the concept of capital accumulation and its role in economic growth. This quote highlights the fundamental principle of reinvesting the output of economic activities into further production, leading to the expansion of the productive capacity of an economy.

Nassau William Senior (1790-1864) was a prominent British economist and professor of political economy at the University of Oxford. He made significant contributions to the field of economics, particularly in the areas of value theory, distribution of income, and economic growth. Senior's work often focused on the dynamics of economic development and the factors that drive increases in wealth and prosperity.

The quote emphasizes the idea that the resources used in the production of goods and services, including labor and other productive instruments, can generate additional value when their output is reinvested into further production. This concept is at the core of the theory of capital accumulation, which is central to understanding the mechanisms of economic growth and the long-term expansion of an economy.

The notion that the powers of labor and other productive instruments can be indefinitely increased through the reinvestment of their products aligns with the concept of capital deepening. Capital deepening refers to the process of increasing the amount of capital per worker, which can lead to higher productivity and economic growth. When the products of labor and capital are used as inputs for further production, the overall productivity of the economy can be enhanced, leading to higher levels of output and income.

The concept also underlines the importance of investment in physical and human capital. By channeling the output of economic activities into the accumulation of physical capital such as machinery, infrastructure, and technology, as well as human capital through education and training, an economy can experience sustained growth in its productive capacity. This process of capital accumulation, coupled with technological advancement, can result in a virtuous cycle of increasing prosperity and improved living standards.

Furthermore, the quote highlights the interconnectedness of production and consumption. When the products of labor and capital are reinvested into further production, it creates a cycle of economic activity that drives sustained growth. This cycle involves the production of goods and services, which are then used as inputs for further production, leading to an expansion of the economy's productive capabilities. As the economy grows, it can support higher levels of consumption and investment, contributing to overall economic development.

In practical terms, the quote underscores the significance of savings and investment in fostering economic progress. By allocating a portion of current output to investment rather than immediate consumption, societies can lay the groundwork for future prosperity. This process of saving and investing in productive assets allows for the accumulation of capital, which in turn fuels economic expansion and the potential for increased wealth generation.

In conclusion, Nassau Senior's quote encapsulates the essence of capital accumulation and its role in driving economic growth. By emphasizing the potential for increasing the powers of labor and other productive instruments through the reinvestment of their products, the quote underscores the importance of capital deepening, investment in physical and human capital, and the interconnectedness of production and consumption in fostering economic development. It serves as a reminder of the enduring significance of savings, investment, and productive reinvestment in shaping the long-term trajectory of economies.