What is capital?

Key Points

Capital refers to the assets that enterprises use to produce goods and services.

The profit-driven nature of capital can drive the development of the economy and society.

The endless pursuit of profit by capital must be restrained.

Concept Explanation

Capital refers to the assets that enterprises use to produce goods and services, broadly referring to all tangible assets such as factories, equipment, and intangible assets such as technology, knowledge patents, as well as human resources.

The essence of capital is profit-driven. In order to obtain profits, capital enters all profitable industries, engages in production, creates profits, and also brings various social resources such as material wealth and spiritual wealth to the entire society, promoting economic development. Therefore, the whole world is using capital as a tool to promote the development of the economy and society.

However, the profit-driven nature of capital must also be restrained. Marx once said that capital fears the absence of profits or too little profit just like nature fears vacuum. In pursuit of more profit, capital will take risks. Therefore, it is necessary to restrain capital through the establishment of sound laws, not allowing the endless pursuit of profit by capital to override the goal of common prosperity.

Classification of capital

Financial capital: Such as stocks, bonds, etc., can be traded in the financial markets. Its market value is not based on the enterprise's book value, but on the market's expectations of its future profit creation.

Social capital: Includes the enterprise's reputation, brand value, organizational culture, and other intangible assets. This is the soft power that enterprises use to generate more profits.

Human capital: Refers to the employees who participate in production and creation in an enterprise. They are the greatest wealth of the enterprise and the key component of all types of capital.

Natural capital: Includes land, minerals, water resources, etc., which are essential elements in the production process of an enterprise.