add site
services
publishers
database
health videos
toolbar
stats
live show
health store
more stuff
JOIN/LOGIN
| advertise add site services publishers database health videos
| | about toolbar stats live show health store more stuff JOIN/LOGIN |
Not to be confused with Financial capital. In economics, capital or capital goods or real capital are factors of production used to create goods or services that are not themselves significantly consumed (though they may depreciate) in the production process. Capital goods may be acquired with money or financial capital. In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business.
[edit] Capital in narrow and broad usesIn classical economics, capital is one of three (or four, in some formulations) factors of production. The others are land, labor and (in some versions) organization, entrepreneurship, or management. Goods with the following features are capital:
These distinctions of convenience carried over to neoclassical economics with little change in formal analysis for an extended period. There was the further clarification that capital is a stock. As such, its value can be estimated at a point in time, say December 31. By contrast, investment, as production to be added to the capital stock, is described as taking place over time ("per year"), thus a flow. Earlier illustrations often described capital as physical items, such as tools, buildings, and vehicles that are used in the production process. Since at least the 1960s economists have increasingly focused on broader forms of capital. For example, investment in skills and education can be viewed as building up human capital or knowledge capital, and investments in intellectual property can be viewed as building up intellectual capital. These terms lead to certain questions and controversies discussed in those articles. Human development theory describes human capital as being composed of distinct social, imitative and creative elements:
Further classifications of capital that have been used in various theoretical or applied uses include:
In part as a result, separate literatures have developed to describe both natural capital and social capital. Such terms reflect a wide consensus that nature and society both function in such a similar manner as traditional industrial infrastructural capital, that it is entirely appropriate to refer to them as different types of capital in themselves. In particular, they can be used in the production of other goods, are not used up immediately in the process of production, and can be enhanced (if not created) by human effort. There is also a literature of intellectual capital and intellectual property law. However, this increasingly distinguishes means of capital investment, and collection of potential rewards for patent, copyright (creative or individual capital), and trademark (social trust or social capital) instruments.the word capital is what you have as a wealth. [edit] Capital in classical economics and beyondWithin classical economics, Adam Smith (Wealth of Nations, Book II, Chapter 1) distinguished fixed capital from circulating capital, including raw materials and intermediate products. For an enterprise, both were kinds of capital. Karl Marx adds a distinction that is often confused with David Ricardo's. In Marxian theory, variable capital refers to a capitalist's investment in labor-power, seen as the only source of surplus-value. It is called "variable" since the amount of value it can produce varies from the amount it consumes, i.e., it creates new value. On the other hand, constant capital refers to investment in non-human factors of production, such as plant and machinery, which Marx takes to contribute only its own replacement value to the commodities it is used to produce. It is constant, in that the amount of value committed in the original investment, and the amount retrieved in the form of commodities produced, remains constant. Investment or capital accumulation in classical economic theory is the production of increased capital. In order to invest, goods must be produced which are not to be immediately consumed, but instead used to produce other goods as a means of production. Investment is closely related to saving, though it is not the same. As Keynes pointed out, saving involves not spending all of one's income on current goods or services, while investment refers to spending on a specific type of goods, i.e., capital goods. The Austrian economist Eugen von Böhm-Bawerk maintained that capital intensity was measured by the roundaboutness of production processes. Since capital is defined by him as being goods of higher-order, or goods used to produce consumer goods, and derived their value from them, being future goods. [edit] Capital ControversyThe Cambridge capital controversy was a 1960s debate in economics concerning the nature and role of capital goods.The debate was largely between economists such as Joan Robinson and Piero Sraffa at the University of Cambridge in England and economists such as Paul Samuelson and Robert Solow at the Massachusetts Institute of Technology, in Cambridge, Massachusetts. The two schools are often labeled "neo-Ricardian" (or "Sraffian") and neoclassical, respectively. In neoclassical economics capitalist income is the rate of profit multiplied by the amount of capital, but the measurement of the "amount of capital" involves adding up quite incompatible physical objects, for example, adding trucks to lasers. Neoclassical economists assumed that there was no real problem here — just add up the money value of all these different capital items to get an aggregate amount of capital. But Sraffa (and Joan Robinson before him) pointed out that this financial measurement of the amount of capital depended partly on the rate of profit. There was thus a circularity in the argument. To date most economists continue to measure capital in the traditional neoclassical sense, but the controversy continues even if under the radar of most in the economics profession. [edit] See also
[edit] Lists
[edit] References
|
| ↑ top of page ↑ | about thumbshots |
