Capital (economics)

In economics, capital consists of assets used for the production of goods and services. A typical example is the machinery used in factories. Capital can be increased by human labor, and does not include certain durable goods like homes and personal automobiles that are not used in the production of saleable goods and services.

Adam Smith defined capital as "that part of man's stock which he expects to afford him revenue". In economic models, capital is an input in the production function. The total physical capital at any given moment in time is referred to as the capital stock (not to be confused with the capital stock of a business entity). Capital goods, real capital, or capital assets are already-produced, durable goods or any non-financial asset that is used in production of goods or services.[1]

In Marxian economics,[2] capital is money used to buy something only in order to sell it again to realize a profit. Capital is extracted from the workers by the capitalist class, and the worker is left without any capital despite producing more value compared to their employers. For Marx, capital only exists within the process of the economic circuit (represented by M-C-M') and formed the basis of the economic system of capitalism. In more contemporary schools of economics, this form of capital is generally referred to as "financial capital" and is distinguished from "capital goods".