Capital

[Noah]

Hey guys,

What does the term Capital mean and what's it associated with, or can you give me and example of capital? (I know it can be associated with corporations and wealth), I heard it used alot in the documentary 'The Corporation'.

Noah.

[LSD]

Simply put, from an economic perspectice, capital means any form of wealth, be it physical or representational.

Therefore "capital gains" means an increase in wealth, whereas "capital loss" means a decrease.

In terms of examples, the obvious one is money. Money is, in this society, the basic form of liquid financial capital. In addition, however, are all other products and producers of wealth, such as stocks, bonds, factories, tools, properties, buildings, etc...

In classical economics, capital was distinguished from other "factors of production" by virtue of it being "human made". That is, natural resources were not quantified as capital despite being obviously factors of wealth. Currently, however, capital has been broadened to include basically all facets of wealth, even going so far as including ideas ("intellectual capital") and nature ("natural capital").

[Jadan ja]

Capital is one of three factors of production (I think that this was defined by Adam Smith). The other two are land and labour.

Capital means all human made goods used to produce other goods. "Natural capital" is actually land, while ideas are labour.

Capital is "dead" labour which increases its value by adding more labour to itself.

[LSD]

Capital means all human made goods used to produce other goods.

Not exclusively no, although that is a part of it.

Again, in modern economic language, capital means any wealth whatsoever, not merely that used in production; hence "capital gains" refers to an aquisition of wealth and not of productive capacity.

Within the classical Ricardian "three factors" model, you are correct; but the question was not restricted to 18th century notions of production. The current use of the word "capital" in an economic sense is far more broad than merely man-made productive means, and a 21st century definition is far more helpful than an 18th.


"Natural capital" is actually land, while ideas are labour.

The classical divide between "land" (that which is of nature) and "capital" (that which is of man) has been blurring for centuries. Modern economic theory does not see natural resources as a seperate "sphere" of productive component, rather it is seen as a form of capital, namely "natural capital".

Likewise, "intellectual capital" is a fundamental part of contemporary economic thinking. Indeed, it lies at the root of any conception of "intellectual property" or "productive intangibles".