1. Let's look at two cases of an investment by an individual or a non-commercial association X.
In the first case, X lends a sum of money or some other kind of object in return for the commitment made by borrower Y to return the loan to X on the agreed maturity. In the second case: X brings to enterprise Y a sum of money or some other kind of object which gives it either partial or total ownership of enterprise Y or only the status of member (cooperatives). In both cases, X remains the owner of what he has invested.
2. In both cases, the service provided by X to Y is the end of a economic exchange only if Y provides X with the remuneration constituting the other term.
The service provided by X to Y is not the end of a economic exchange between X and Y when the following happens. Y considers it normal that the remuneration for the service provided by X should come at the time of the liquidation of his investment to Z. To make the exchange between X and Z a substitute for the exchange between X and Y constitutes an infringement of exchange capitalism, in other words of Yield Capitalism, as distinct from surplus-value capitalism.
3. In the case of a loan, the investment is temporary and subject to a commitment that the borrower will return the loaned item.
In the second case, the investment is permanent, with no commitment to return at a predetermined term. To speak of loan and credit in the first case and of capital or equity contribution in the second case seems to be the vocabulary convention most spontaneously used to account for this difference. Let us stick to this convention, even if it means supplementing it if the need arises.
4. An investment in the permanent financing of an enterprise is therefore the end of an economic exchange only if the distributions of all or part of benefit the enterprise's profits remunerate it.
We will agree more before we call these distributions profits. At the same time, we will resume the custom of talking about its return on an interest-bearing yield.