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Conceptualizing CapitalismInstitutions, Evolution, Future$
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Geoffrey M. Hodgson

Print publication date: 2015

Print ISBN-13: 9780226168005

Published to Chicago Scholarship Online: January 2016

DOI: 10.7208/chicago/9780226168142.001.0001

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Meanings of Capital

Meanings of Capital

(p.173) Chapter Seven Meanings of Capital
Conceptualizing Capitalism

Geoffrey M. Hodgson

University of Chicago Press

Originally “capital” referred to head-counts of cattle, as measures of wealth. But in thirteenth-century Italy it acquired its enduring commercial meaning as money, or the money-value of assets invested in enterprise. In contrast, Adam Smith treated physical assets, machines and people as “capital” and this different usage has dominated economics since. The pre-Smithian meaning referred to money or other saleable assets that could be used as collateral. This chapter questions the change in meaning by economists and sociologists, and highlights the importance for capitalism of collateralizable property. “Human capital” can only be collateral if the humans involved are slaves. “Social capital” can never be used as collateral and it is not even owned. These important issues are masked by the broadened notion of “capital” in economics and sociology. Given the conceptual problems involved, economists and sociologists should consider returning to the pre-Smithian and surviving business usage of the term.

Keywords:   capital, wealth, human capital, slavery, social capital, collateralizability, sociology, Gary Becker, Pierre Bourdieu

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