Question

What is Capital and why have economists kept inventing new forms of capital (human capital, social capital, cultural capital, knowledge capital, etc)? (2-3 Pages) (Do Not plagiarize, cite your sources)

Think about the following issues:

1. We have defined capital as costly to acquire, durable (with depreciation), and increasing future productivity.  Does this cover all the theorists in the course?
2. Is there a move from capital as specific tangible productive asset to capital as intangible general aspect of productivity in society?
3. Why do we call acquired skills human capital, network connections social capital, and specific cultural knowledge cultural capital?  What intellectual or political work is this relabeling doing?

Answer 1

Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources. Capital can also be associated with capital assets of a company that requires significant amounts of capital to finance or expand.Capital can be held through financial assets or raised from debt or equity financing. Businesses will typically focus on three types of business capital: working capital, equity capital, and debt capital. In general, business capital is a core part of running a business and financing capital intensive assets.From a financial capital economics perspective, capital is a key part of running a business and growing an economy. Companies have capital structures that include debt capital, equity capital, and working capital for daily expenditures. Individuals hold capital and capital assets as part of their net worth. How individuals and companies finance their working capital and invest their obtained capital is critical for growth and return on investment.Capital is typically cash or liquid assets held or obtained for expenditures. In financial economics, the term may be expanded to include a company’s capital assets. In general, capital can be a measurement of wealth and also a resource that provides for increasing wealth through direct investment or capital project investments.he financial capital economics definition can be analyzed by economists to understand how capital in the economy is influencing economic growth. Economists watch several metrics of capital including personal income and personal consumption from the Commerce Department’s Personal Income and Outlays reports as well as investment found in the quarterly Gross Domestic Product report.It is in fact impossible to account for the structure and functioning of the social world unless one reintroduces capital in all its forms and not solely in the one form recognized by economic theory. Economic theory has allowed to be foisted upon it a definition of the economy of practices which is the historical invention of capitalism;

Cultural capital

  Cultural capital can exist in three forms: in the embodied state, i.e., in the form of long-lasting dispositions of the mind and body; in the objectified state, in the form of cultural goods (pictures, books, dictionaries, instruments, machines, etc.), which are the trace or realization of theories or critiques of these theories, problematics, etc.; and in the institutionalized state, a form of objectification which must be set apart because, as will be seen in the case of educational qualifications, it confers entirely original properties on the cultural capital which it is presumed to guarantee.Cultural capital can be acquired, to a varying extent, depending on the period, the society, and the social class, in the absence of any deliberate inculcation, and therefore quite unconsciously. It always remains marked by its earliest conditions of acquisition which, through the more or less visible marks they leave (such as the pronunciations characteristic of a class or region), help to determine its distinctive value. It cannot be accumulated beyond the appropriating capacities of an individual agent; it declines and dies with its bearer (with his biological capacity, his memory, etc.). Because it is thus linked in numerous ways to the person in his biological singularity and is subject to a hereditary transmission which is always heavily disguised, or even invisible, it defies the old, deep-rooted distinction the Greek jurists made between inherited properties (ta patroa) and acquired properties (epikteta), i.e., those which an individual adds to his heritage. It thus manages to combine the prestige of innate property with the merits of acquisition. Because the social conditions of its transmission and acquisition are more disguised than those of economic capital, it is predisposed to function as symbolic capital, i.e., to be unrecognized as capital and recognized as legitimate competence, as authority exerting an effect of (mis)recognition, e.g., in the matrimonial market and in all the markets in which economic capital is not fully recognized, whether in matters of culture, with the great art collections or great cultural foundations, or in social welfare, with the economy of generosity and the gift. Furthermore, the specifically symbolic logic of distinction additionally secures material and symbolic profits for the possessors of a large cultural capital: any given cultural competence (e.g., being able to read in a world of illiterates) derives a scarcity value from its position in the distribution of cultural capital and yields 18 Pierre Bourdieu profits of distinction for its owner. In other words, the share in profits which scarce cultural capital secures in class-divided societies is based, in the last analysis, on the fact that all agents do not have the economic and cultural means for prolonging their children’s education beyond the minimum necessary for the reproduction of the labor-power least valorized at a given momen

Social capital

Social capital is the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition—or in other words, to membership in a group which provides each of its members with the backing of the collectivelyowned capital, a “credential” which entitles them to credit, in the various senses of the word. These relationships may exist only in the practical state, in material and/or symbolic exchanges which help to maintain them. They may also be socially instituted and guaranteed by the application of a common name (the name of a family, a class, or a tribe or of a school, a party, etc.) and by a whole set of instituting acts designed simultaneously to form and inform those who undergo them; in this case,they are more or less really enacted and so maintained and reinforced, in exchanges. Being based on indissolubly material and symbolic exchanges, the establishment and maintenance of which presuppose reacknowledgment of proximity, they are also partially irreducible to objective relations of proximity in physical (geographical) space or even in economic and social space .social capital possessed by a given agent thus depends on the size of the network of connections he can effectively mobilize and on the volume of the capital (economic, cultural or symbolic) possessed in his own right by each of those to whom he is connected. This means that, although it is relatively irreducible to the economic and cultural capital possessed by a given agent, or even by the whole set of agents to whom he is connected, social capital is never completely independent of it because the exchanges instituting mutual acknowledgment presuppose the reacknowledgment of a minimum of objective homogeneity, and because it exerts a multiplier effect on the capital he possesses in his own right.

Human Capital.

Human capital is an intangible asset or quality not listed on a company's balance sheet. It can be classified as the economic value of a worker's experience and skills. This includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.The concept of human capital recognizes that not all labor is equal. But employers can improve the quality of that capital by investing in employees—the education, experience, and abilities of employees all have economic value for employers and for the economy as a whole. it is perceived to increase productivity and thus profitability. So the more a company invests in its employees (i.e., in their education and training), the more productive and profitable .Human capital is typically managed by an organization's human resources (HR) department. This department oversees workforce acquisition, management, and optimization. Its other directives include workforce planning and strategy, recruitment, employee training and development, and reporting and analytics.

Knowledge Capital

Knowledge capital is the intangible value of an organization made up of its knowledge, relationships, learned techniques, procedures, and innovations. In other words, knowledge capital is the full body of knowledge an organization possesses.Having employees with skills and access to knowledge capital puts a company at a comparative advantage to its competitors. Knowledge capital, sometimes referred to as intellectual capital, is considered an intangible asset.Rather than relying on the physical effort of its machines and other equipment, a company's knowledge capital is dependent on the skills and talents of its workers. This is what makes it an intangible asset with intangible value, or assets that we cannot touch whose value we cannot measure.Knowledge capital is anything of value that results from people's experience, skills, knowledge, and learning within an organization. This capital has immeasurable value and cannot be quantified. As such, it gives a company a competitive advantage over its rivals.rganizations with high knowledge capital may be more profitable or productive compared to organizations with lower knowledge capital. Businesses develop knowledge capital by encouraging employees to share information through white papers, seminars, and person-to-person communication. When this capital is pooled together and shared, the results can be worth a great deal.it reduces the odds that a company will have to reinvent the wheel each time a particular process is undertaken. This is because its employees have access to documents detailing the necessary steps, along with access to personnel who have undertaken similar activities. Even though it may not be a physical asset, knowledge capital still requires a lot of investment.

The fundamental problem associated with measuring the contribution of a capital input to the period by period economic performance of a business unit is the durability of capital: a capital input is purchased in an initial accounting period but its contribution to the production of outputs persists over several subsequent periods. Thus the initial purchase cost of the capital input cannot be entirely allocated to the period of purchase but it is difficult to know precisely how the initial cost should be allocated over subsequent periods. This problem of determining the period by period contributions to production and the associated costs is perhaps the fundamental problem in accounting theory. The difficulties associated with this fundamental allocation problem are greatly magnified if the price level is not stable. In this paper, we will not assume stability of prices.Once the initial purchase cost of a durable capital input has been allocated across accounting periods, period costs can be subtracted from period revenues and accounting period income or profits can be calculated. Thus the measurement of capital goes hand in hand with the measurement of business income: different measures for the period by period cost of capital will give rise to different income measures.Once the revenues and costs which pertain to the outputs produced and the inputs utilized by a production unit during an accounting period have been determined, we can address the problem of evaluating the performance or efficiency of the unit. This can be done in at least three ways: (i) the net income or profits (the difference between revenues and costs) of the unit in one period can be compared to the profits of other units or the profits of the same unit in a previous period; (ii) the rate of return on assets employed (equal to net income divided by the value of assets employed by the unit at the beginning of the accounting period) can be compared to rates of return on similar business units or the same unit in a prior period, and (iii) the productivity change of the business unit going from one period to another can be computed.The economic importance of these broad developments lies in the central role played by new ideas in the growth, productivity and incomes of modern economies. Economists estimate that innovation in its various forms accounts for 30 percent to 40 percent of the gains in growth and productivity by the American economy during the 20th century, more than any other factor. Moreover, in recent years, the pace of innovation and its impact have increased. Furthermore, much of the very rapid growth and modernization by many developing nations in the last generation can be traced to their adoption of Western technological and organizational innovations, largely through the foreign direct investments of multinational companies.The successful application of new ideas in innovations does not occur by chance; rather, it requires identifiable conditions. These conditions include large public and private investments in research and development, education and training, and an economic and political environment that promotes the creation of new firms and new investments by existing firms. One legal aspect is especially critical to the development and broad application of economically-powerful ideas – the strict protection and enforcement of intellectual property rights. Without such protections and enforcement, innovators have little incentive, especially to develop new technologies, materials and production processes. The same effect would apply to the development of new ways of financing, marketing and distributing goods and services, and new ways to organize and manage firms, when these ways take forms that are subject to patents or embodied in software that carries copyrights. Finally, the transfers of new technologies, production processes and other innovations through foreign direct investments to developing economies also depend on the recognition and enforcement of the intellectual property rights of the innovators.

The intellectual capital of a company is often divided into four categories: 1) human capital, 2) customer (relational) capital, 3) intellectual property, and 4) infrastructure assets2 . These are not watertight compartments. In this presentation the focus is on intellectual property assets which are protected by the modern system of intellectual property rights (IPRs). In fact, the IPRs system helps an owner of useful new or original knowledge to define, identify, record, measure or value, and manage successfully such knowledge assets for business purposes. But for the legal edifice of the modern system of intellectual property rights (IPRs) such a knowledge or intangible asset would not have the basic characteristics . A new product may be launched by the inventor who conceived it or by an entrepreneur. In either case the new product would be finally introduced into the market by an enterprise or through the collaboration, partnership or strategic alliance of enterprises where each enterprise in the network adds value at one or more points between the initial conception of a new product idea and its evolution through various stages to the final delivery of a new product to the user or consumer. This value addition at every step of the evolution of an idea or concept till its final delivery to a user or customer is essentially the result of new or original creative or innovative intangible or intellectual assets provided by the participants in the value chain. These participants include investors, R&D centers, design firms, prototype or technology testing and evaluation centers, suppliers of raw materials and parts, distributors (wholesalers, dealers, and retailers), advisors and consultants, and of course the final users or consumers .