Definitions of capital

Appendix E

§1. Definitions are not always clear or agreed upon. Capital goods (e.g., machines) are not the same as trade capital (e.g., funds used to buy inventory). Machines owned and used by a business are not the same as a hobbyist’s machines (or are they?)

§2. Capital contributes to production over time, as it’s not “used up” immediately. As such it represents “stored value” from prior work (this idea leads Marxists to claim that capital is merely “stored labor” but that ignores the many other components that go into making goods, such as managerial skill, innovation, market making, etc.)

§3. There are many definitions, but I can’t be bothered to split those hairs 😉

This post is part of a series in the Marshall 2020 Project, i.e., an excuse for me to read Alfred Marshall’s Principles of Economics (1890 first edition/1920 eighth edition), which dominated economic thinking until Van Neumann and Morgenstern’s Theory of Games and Economic Behaviour (1944) and Samuelson’s Foundations of Economic Analysis (1946) pivoted economics from institutional induction to mathematical deduction.

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

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