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Concept
Individual capital
Summary
Individual capital, the economic view of talent, comprises inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill, creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy, non-transferable personal trust and leadership.
Individual talent and initiative was recognized as an intangible quality of persons in economics back to at least Adam Smith. He distinguished it (as "enterprise") from labour which can be coerced and is usually seen as strictly imitative (learned or transmitted, via such means as apprenticeship).
Marxist economics refers instead to "an individual's social capital—individuals are sources neither of creativity and innovation, nor management skill. A problem with that analysis is that it simply cannot explain the substitution problem and lack of demand that occurs when, for instance, an understudy takes on a leading role, or a second author takes over writing a popular book series. At the very least there must be some conditional, if not firm-specific then "class specific", special ability to command premiums for outstanding personal performance.
Neoclassical economics by contrast refers to "the individual in whom the human capital is ... embedded", which implies a strong association of the individual with the instructional capital they learn from, with little or no social capital influence. This is orthogonal to the Marxist view, but not necessarily opposed.
Human development theory reflects both distinctions: it sees labour as the yield of individual capital in the same way that neoclassical macro-economics sees financial capital as the yield of the looser idea of human capital. But the rest problem and social welfare function selection, as well as the subjective factors in behavioral finance, has led to a closer analysis of factors of production. In effect, the financial architecture is no longer trusted as an arbiter of the value of life as it was in neoclassical economics.
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Ontological neighbourhood
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Capital (economics)
In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. At the macroeconomic level, "the nation's capital stock includes buildings, equipment, software, and inventories during a given year." A typical example is the machinery used in factories. Capital can be increased by the use of the factors of production, which however excludes certain durable goods like homes and personal automobiles that are not used in the production of saleable goods and services.
Social capital
Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity. Social capital is a measure of the value of resources, both tangible (e.g., public spaces, private property) and intangible (e.g.
Factors of production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four basic resources or factors of production: land, labour, capital and entrepreneur (or enterprise). The factors are also frequently labeled "producer goods or services" to distinguish them from the goods or services purchased by consumers, which are frequently labeled "consumer goods".