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Encyclopedia > Capital (economics)

Capital has a number of related meanings in economics, finance and accounting.     Economics (from the Greek οίκος [oikos], house, and νομος [nomos], rule, hence household management) is a social science that studies the production, distribution, trade and consumption of goods and services. ... Finance studies and addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks entailed in their projects. ... Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ...


In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business. Initially, it is assumed here that other styles of capital, e.g. physical capital, can be acquired with money or financial capital, so there is little need here for any further analysis of the latter. So below, the word "capital" is short-hand for "real capital" or "capital goods" or means of production. Also to be ignored will be the problems of aggregating capital and the capital controversy. Finance studies and addresses the ways in which individuals, businesses and organizations raise, allocate and use monetary resources over time, taking into account the risks entailed in their projects. ... Accountancy (British English) or accounting (American English) is the process of maintaining, auditing, and processing financial information for business purposes. ... Wealth is an abundance of items of economic value, or the state of controlling or possessing such items, and encompasses money, real estate and personal property. ... به خاطر اعمال تخریبی یک کاربر مشخص AOL، ویکی‌پدیا معمولاً proxyهای AOL را می‌بندد. متأسفانه ممکن است تعداد زیادی از کاربران AOL از یک خادم proxy واحد استفاده کنند، و در نتیجه کاربران بی‌تقصیر AOL معمولاً ندانسته بسته می‌شوند. از دردسر ایجاد شده عذر می‌خواهیم. اگر این اتفاق برای شما افتاد، لطفاً به یکی از مدیران از یک نشانی پست الکترونیک AOL پیغام بفرستید. حتماً نشانی IPی را در فوق داده شده ذکر کنید. بازگشت به صفحهٔ اصلی. گرفته شده از «http://fa. ... An example of Money. ... Financial capital, or economic capital, is any liquid medium or mechanism that represents wealth, or other styles of capital. ... The means of production are physical, non-human, inputs used in production. ... The capital controversy refers to a debate in economics concerning the nature and role of capital goods (or means of production) that occurred during the 1960s, largely between economists such as Joan Robinson and Piero Sraffa at the University of Cambridge in England and economists such as Paul Samuelson and...

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Capital in classical economic theory

In classical economics, capital is one of four factors of production, the others being land, labour and the entrepreneur. Goods with the following features are capital: Classical economics is a school of economic thought whose major developers include William Petty, Adam Smith, David Ricardo, Thomas Malthus, and John Stuart Mill, and Johann Heinrich von Thünen. ... Factors of production are resources used in the production of goods and services in economics. ... In economics, land comprises all naturally occurring resources, such as geographical locations, mineral deposits, and even portions of the electromagnetic spectrum. ... In classical economics and all micro-economics labour is a measure of the work done by human beings and is one of three factors of production, the others being land and capital. ...

  • It can be used in the production of other goods (this is what makes it a factor of production).
  • It is human-made, in contrast to "land," which refers to naturally occurring resources such as geographical locations and minerals.
  • It is not used up immediately in the process of production, unlike raw materials or intermediate goods.

The third part of the definition was not always used by classical economists. The classical economist David Ricardo would use the above definition for the term fixed capital while including raw materials and intermediate products are part of his circulating capital. For him, both were kinds of capital. David Ricardo (April 18, 1772 – September 11, 1823), a British political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists. ... Fixed capital is a concept in economics and accounting, first theoretically analysed in some depth by the economist David Ricardo. ... Circulating capital is a term used by classical economists such as David Ricardo and others such as Karl Marx. ...


Karl Marx adds a distinction that is often confused with 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, ie, 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. Karl Heinrich Marx (May 5, 1818 Trier, Germany – March 14, 1883 London) was an influential German philosopher, political economist, and revolutionary organizer of the International Workingmens Association. ... Marxian economics refers to a body of economic thought stemming from the work of Karl Marx. ... Constant capital, or c, in Marxian political economy is one of the two forms that capital adopts in the workplace, in contrast to variable capital (v). ... The production of surplus value, from Karl Marxs Capital in Lithographs, by Hugo Gellert, 1934. ... The labor theory of value (LTV) is a theory in economics and political economy concerning a market-oriented society: the theory equates the value of an exchangeable good or service with the amount of labor required to produce it. ... Constant capital (c), is a concept created by Karl Marx and used in Marxian political economy. ... The term replacement cost refers to the amount that a company would have to pay, at the present time, to replace any one of its assets. ...


Investment or capital accumulation in classical economic theory is the act of producing 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 income on current goods or services, while investment refers to spending on a specific type of goods, i.e., capital goods. Investment or investing is a term with several closely-related meanings in finance and economics. ... Most generally, the accumulation of capital refers simply to the gathering or amassment of objects of value; the increase in wealth; or the creation of wealth. ... The means of production are physical, non-human, inputs used in production. ... Save might refer to: Save (sport) - to stop a goal or maintain the lead To save a document in computer file management (see also Saving a webpage) The River Save (Zimbabwe), Zimbabwe The River Save (Hungary), Hungary -- joins the Danube just above Belgrade. ... [[Image:John maynard ...


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. Eugen von Böhm-Bawerk (February 12, 1851 - August 27, 1914) made important contributions to the development of Austrian economics. ... Capital intensity is the term in economics for the amount of fixed or real capital present in relation to other factors of production, especially labor. ... Roundaboutness, or roundabout methods of production is the term used to describe the process whereby capital goods are produced first and then, with the help of the capital goods, the desired consumer goods are produced. ...


Broadening the definition of capital

Traditional economic theory generally viewed capital as physical items, such as tools, buildings and vehicles that are used in the production process. Other economists have focussed on broader forms of capital. For example, investment in skills and education can be viewed as building up human capital. Human capital is a way of defining and categorizing peoples skills and abilities as used in employment and otherwise contribute to the economy. ...


Some theories use the terms intellectual capital or knowledge capital which lead to certain questions and controversies discussed in those articles. Intellectual capital is a term with various definitions in different theories of economics. ... Instructional capital is a term used in educational administration, to reflect capital resulting from investment in producing learning materials. ...


In general, intellectual capital is that which produces new " intellectual property rights", and that in turn is "whatever one can get paid royalties for". Further, one can create intellectual property rights simply by taking someone else's ideas and then patenting them. So intellectual capital need not be used. Intellectual property, or IP, refers to a legal entitlement which sometimes attaches to the expressed form of an idea, or to some other intangible subject matter. ... A patent is a set of exclusive rights granted by a state to a person for a fixed period of time in exchange for the regulated, public disclosure of certain details of a device, method, process or composition of matter (substance) (known as an invention) which is new, inventive, and...


Classifications of capital that have been used in various economic theories include:

  • Financial capital which represents obligations, and is liquidated as money for trade, and owned by legal entities.
  • Natural capital which is inherent in ecologies and protected by communities to support life, e.g. a river which provides farms with water.
  • Infrastructural capital is non-natural support systems (e.g. clothing, shelter, roads, PCs) that minimize need for new social trust, instruction, and natural resources. (Almost all of this is manufactured, leading to the older term manufactured capital, but some arises from interactions with natural capital, and so it makes more sense to describe it in terms of its appreciation/depreciation process, rather than its origin: much of natural capital grows back, infrastructural capital must be built and installed.)
  • Human capital, arising from investment in skills and education. Human development theory recognizes it as being composed of clear and distinctive social, imitative and creative elements:
    • Social capital is the value of trusting relationships between individuals in an economy.
    • Individual capital which is inherent in persons, protected by societies, and trades labor for trust or money . Close parallel concepts are 'talent', 'ingenuity', 'leadership', 'trained bodies', or 'innate skills' that cannot reliably be reproduced by using any combination of any of the others above. In traditional economic analysis individual capital is more usually called labor.

Although it is still possible to calculate the macro economic idea of "human capital" as payments (like salary), it is rarely or not used when discussing the process of planning investment: for this it is broken down into the more specific styles, which are distinct when one considers the means of identifying them, investing in, and exploiting them. The term "human capital" may thus do more harm than good. Financial capital, or economic capital, is any liquid medium or mechanism that represents wealth, or other styles of capital. ... Natural capital is a metaphor for the mineral, plant, and animal formations of the Earths biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other natural services. ... Infrastructural capital refers to any physical means of production or means of protection beyond that which can be gathered or found directly in nature, i. ... Infrastructural capital refers to any physical means of production or means of protection beyond that which can be gathered or found directly in nature, i. ... Human capital is a way of defining and categorizing peoples skills and abilities as used in employment and otherwise contribute to the economy. ... Human development theory is an economic theory that merges older ideas from ecological economics, sustainable development, welfare economics, and feminist economics. ... Social capital is a socio-economic concept with a variety of inter-related definitions, based on the value of social networks. ... Individual capital comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy, non-transferable personal trust and leadership. ... Talent refers to a special aptitude, faculty or gift of a person. ... The term ingenuity or applied ideas is used in the analysis of Thomas Homer-Dixon, building on that of Richard Romer, to refer to what is usually called instructional capital. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. ... Human capital is a way of defining and categorizing peoples skills and abilities as used in employment and otherwise contribute to the economy. ...


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. Natural capital is a metaphor for the mineral, plant, and animal formations of the Earths biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other natural services. ... Social capital is a socio-economic concept with a variety of inter-related definitions, based on the value of social networks. ... Consensus has two common meanings. ...


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. Intellectual capital is a term with various definitions in different theories of economics. ... In law, particularly in common law jurisdictions, intellectual property is a form of legal entitlement which allows its holder to control the use of certain intangible ideas and expressions. ... A patent is a set of exclusive rights granted by a state to a person for a fixed period of time in exchange for the regulated, public disclosure of certain details of a device, method, process or composition of matter (substance) (known as an invention) which is new, inventive, and... Copyright symbol. ... Individual capital comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy, non-transferable personal trust and leadership. ... A trademark (Commonwealth English: trade mark) is a distinctive sign of some kind which is used by a business to uniquely identify itself and its products and services to consumers, and to distinguish the business and its products or services from those of other businesses. ... Social capital is a socio-economic concept with a variety of inter-related definitions, based on the value of social networks. ...


See also

Capital deepening is a term used in economics to describe an economy where capital per worker is increasing, it is an increase in the capital intensity. ... Wikiquote has a collection of quotations related to: Capitalism Capitalism has been defined in various ways. ... Factors of production are resources used in the production of goods and services in economics. ... Venture capital is a general term to describe financing for startup and early stage businesses as well as businesses in turn around situations. ... The capitalist mode of production is a concept in Karl Marx’s critique of political economy. ...

Lists


  Results from FactBites:
 
capital, in economics. The Columbia Encyclopedia, Sixth Edition. 2001-05 (386 words)
In the broad sense, capital consists of such paper as stocks and bonds (financial capital), which is used to acquire the physical capital of tools, machines, stores of merchandise, houses, means of transportation—any materials used to extract, transport, create, or alter goods.
A distinction is also made between capital stocks, or circulating capital (such as raw materials, goods in process, finished goods, and sometimes wages), and capital instruments, or fixed capital (such as machines, tools, railways, and factories).
Capital may be classed as specialized, such as railway equipment, or unspecialized, such as lumber or other raw materials having many uses.
Capital (economics) - Wikipedia, the free encyclopedia (1024 words)
Investment or capital accumulation in classical economic theory is the act of producing increased capital.
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.
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.
  More results at FactBites »

 
 

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