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capital, in economics

capital, in economics, the elements of production from which an income is derived, usually defined with the exception of land and labor. As originally used in business, capital denoted interest-bearing money. In classical economic theory it was one of the three major factors of production, along with land and labor. 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. Marketable intangibles, such as credits, goodwill, promises, patents, and franchises, are also included by some economists. Capital goods are those that form a nation's productive capacity, as opposed to consumer goods, which are bought for personal or household use. 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. Economic theorists believe that capital arose out of the need to use the world's limited natural materials efficiently. The scarcity of the earth's resources necessitates the creation of materials (capital) that can act on the resources in such a way as to make more goods available to society than would normally exist. Capital goods can be considered a form of deferred consumption, because they produce goods for future consumption, but are not themselves consumable items. The expansion of capital formation—the flow of savings into the creation of new productive facilities—is often the most important target of economic planning.

Bibliography

See I. Fisher, The Nature of Capital and Income (1906); F. A. von Hayek, The Pure Theory of Capital (1941, repr. 1975); S. S. Kuznets, Capital in the American Economy (1961, repr. 1975); J. Robinson, Accumulation of Capital (3d ed. 1985); S. Ahmad, Capital in Economic Theory (1991).

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capital, in architecture

capital, in architecture, the crowning member of a column, pilaster, or pier. It acts as the bearing member beneath the lintel or arch supported by the shaft and has a spreading contour appropriate to its function. The most primitive type, of which examples were found in the Beni Hassan tombs, Egypt, consisted of a square block. In later forms the capital had three well-defined parts: the neck, or necking, where it joins the shaft; the echinus, or spreading member above it; and the abacus, or block at the top. In Egypt such types were developed as early as 1500 B.C.; papyrus buds, the lotus, and the palm leaf were used as motifs of ornamentation. The Greeks perfected three types belonging to three separate orders of architecture—the Doric order, the Ionic order, and the Corinthian order—which were also used in slightly modified forms by the Romans in the form of the composite order. The classic forms of capitals continued in use after the fall of Rome, but the Romanesque and Gothic designers introduced new forms rich in variety: grotesque heads, birds, and animals. In the 15th cent., with the Renaissance, came a return to the classical orders that continued in use until the late 19th and early 20th cent. when the modernists cast out classical decoration.

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capital

In architecture, the crowning member of a column, pier, pilaster, or other vertical form, providing a structural support and transition for the horizontal member (entablature) or arch above. In Classical styles, the capital is the architectural member that most readily identifies the order. Simple stone capitals have been found in the earliest known pyramids of ancient Egypt (c. 2890–2686 BC), at Saqqarah.

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capital

In economics, the stock of resources that are used to produce other goods now and in the future. In classical economics the three factors of production are capital, labour, and land. Capital embodies the man-made resources, which include the buildings, plant, equipment, and inventories created by all three factors. In this sense, capital goods may be contrasted with consumer goods. The creation of capital goods means that consumption is forgone, resulting in saving. The flow of saving becomes a flow of investment. Expenditures on education and training are often referred to as investment in human capital (see Gary S. Becker). Financial capital is the term given to the stocks and bonds issued in order to finance the acquisition of capital goods.

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capital¹

1. 

a. the seat of government of a country or other political unit

b. (as modifier): a capital city

2. material wealth owned by an individual or business enterprise

3. wealth available for or capable of use in the production of further wealth, as by industrial investment

4. the capitalist class or their interests

5. Law involving or punishable by death

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capital²

the upper part of a column or pier that supports the entablature

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capital [′kap·ət·əl]

(architecture)

The topmost part of a column.