The Confusing Nature of Capital
27 June 2017 | Pago Pago, American Samoa
Capital is first off not labor. It is also not the materials used in manufacture. It is the durable goods used in manufacture. The physical plants and equipment used to produce goods The machines to form tires. The molds to form castings. The stamping machines to stamp and shape metals.
It is also the value of that equipment, but not the value of other things or of cash per se. Cash can simply be hoarded as cash or near cash and has nothing to do with capital. These are hard concepts for most people who very much confuse things. And the problem is compounded these days because capital can be so much more in the modern age.
A patent is now a capital good. It allows its inventor the exclusive use of the invention or process. The owner (a patent may be sold, like a piece of plant and equipment) can license the non-exclusive use of the patent to others over and over again to the extent the market will bear. Unlike physical equipment, one user does not precluded another. when the patent expires, anyone may use the invention or process.
The same is true of a copywrite, trade dress protection (goes forward indefinitely), a trademark (an aid to sales), trade secrets, and other modern forms of capital. The value of these intangible rights is also capital, but again, it is not the same as just cash in hand of from stocks sold. These are modern developments in the concept of capital that are including as such in national income accounting and analysis, but most people are simply lost here and don't know what is what.
Hence this note.