ABSTRACT
In economics, capital may be defined as produced wealth used productively for gain. It is thus distinguished from land and other natural resources, which are not “produced”, and from consumers’ goods, which are not used productively for gain. The economist’s conception of capital is unlike the conceptions which govern the practice of accountants. The reason is that many things which are properly counted as part of the capital of a person or a firm make no part of the aggregate capital of society. A house occupied by a tenant is part of its owner’s capital, but it is not for that reason any more a part of the productive apparatus of the community than it would be if it were owned by its occupant. A may include what B owes him in an inventory of his capital, but in the aggregate view A’s claim and B’s liability cancel. Patents, copyrights, the franchises of public service companies, and other exclusive privileges, or the goodwill of a business undertaking, its established claim upon the preferences of buyers, have similar status. Such things are sometimes called “acquisitive capital”, to distinguish them from the things which constitute the true capital of the community.
