Questions about Capital (economics)
Short answers, pulled from the story.
What is capital in economics?
In economics, capital, or capital goods, refers to those durable produced goods that are in turn used as productive inputs for further production of goods and services. A typical example is the machinery used in a factory, and at the macroeconomic level the nation's capital stock includes buildings, equipment, software, and inventories.
What is the difference between capital goods and consumer goods?
People buy capital goods to use as static resources to make other goods, whereas consumer goods are purchased to be consumed. An automobile bought as a private car is a consumer good, while dump trucks used in construction are capital goods because companies use them to build roads, dams, buildings, and bridges.
What was the Cambridge capital controversy?
The Cambridge capital controversy was a dispute about the measurement of capital between economists at MIT in Cambridge, Massachusetts and economists at the University of Cambridge in the UK. The Cambridge, UK economists, including Joan Robinson and Piero Sraffa, claimed there is no basis for aggregating the heterogeneous objects that constitute capital goods.
What are the different types of capital in economics?
Modern classifications include financial capital, social capital, instructional capital, human capital, public capital, and natural or ecological capital. Earlier discussions focused on physical capital such as tools, buildings, and vehicles, but since at least the 1960s economists have increasingly focused on broader forms including human capital, knowledge capital, and intellectual capital.
How did Karl Marx define capital?
In Marxian theory capital is viewed as a social relation, and Marx distinguished variable capital, his term for investment in labor-power that he saw as the only source of surplus-value, from constant capital, investment in non-human factors such as plant and machinery. Marxian critique also identifies fictitious capital, the intangible representations of physical capital such as stocks, bonds, and securities.
Why is capital considered a factor of production?
Capital is considered a factor of production alongside land and labour because it is not used up immediately in production, unlike raw materials or intermediate goods, and because it can be produced or increased, in contrast to land and non-renewable resources. This classification originated during the classical economics period and has remained the dominant method for classification.