What is capital?

Views 21KAug 9, 2023

Core points

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

The nature of capital's pursuit of profit can promote the development of economy and society.

Capital's thirst for profits is endless and must be restrained.

Detailed explanation of concept

Capital refers to the assets used by enterprises to produce goods and services, generally refers to all the plant, equipment and other tangible assets, technology, knowledge patents and other intangible assets, as well as human resources.

The essence of capital is profit-seeking. In order to obtain profits, capital comes to all profitable industries and devotes itself to production. While creating profits, it also brings various social resources such as material wealth and spiritual wealth to the whole society and promotes economic development. Therefore, the whole world is using capital as a tool to promote economic and social development.

However, the nature of capital's pursuit of profit must also be restrained. Marx once said that capital is afraid of no profit or too little profit, just as nature is afraid of a vacuum. In order to make more profits, capital will take risks. Therefore, capital must be restricted by sound laws, and capital's never-ending thirst for profits should not be allowed to override the goal of common prosperity.

Classification of capital

Financial capital: such as stocks, bonds, etc., can be traded in the financial market, its market value is not based on the book value of the enterprise, but on the market expectations of its future profits.

Social capital: the goodwill or brand value of an enterprise, including soft assets such as organizational culture. This is the soft power for enterprises to create more profits.

Human capital: the main body is the employees who participate in production and creation, is the greatest wealth of the enterprise, and is also the leading component of all capital.

Natural capital: including land, mineral resources, water resources, etc., is a necessary element of the enterprise production process.

Disclaimer: The above content does not constitute any act of financial product marketing, investment offer, or financial advice. Before making any investment decision, investors should consider the risk factors related to investment products based on their own circumstances and consult professional investment advisors where necessary.