Capital

Typically viewed as an accumulation of anything of value, interpretations of capital have multiplied into a broad range of meanings. In its simplest form, capital refers to the value of accumulated goods, although some would suggest that this definition be limited to the value of accumulated goods that will be used to generate profits. The valuation of capital may be based on its use value (the value of the capital in the production of other goods), its exchange value (the value of the capital in trade for other goods), or its labor value (the labor cost of reproducing the goods).

Although capital often is viewed as synonymous with money, capital has the additional property of convertibility. Capital can be easily converted from money into labor, into commodities, and then back into money. This conversion (or circulation or trade) can cause capital to increase in value. For example, when capital is converted into labor (via the payment of $10 in wages to a coal miner), the labor produces a commodity (coal). If the coal is later sold for $12, then $10 of money was converted into $12 of commodity via circulation. Money is a special case of capital because it can be deployed either as capital (e.g., to increase the value of existing capital stocks) or in nonproductive activities (e.g., entertainment). Capital's meaning was derived from royal capital grants of land during the 15th century. These capital grants formed the basis of estates that were intended to accumulate additional capital. The value of capital is tied to its future potential for productivity.

Some social scientists have moved beyond viewing capital as a thing and instead conceive of capital using the Marxist perspective of capital as a social relation. This definition of capital is used to refer to the class of people who possess capital. This elite group of people use their capital to employ (and control) the working class (or proletariat). Membership in the working class is defined by the lack of capital; the only commodity of value possessed by the working class is their labor power, which is traded for wages. The exchange of capital (money) for labor (and the rules that govern this exchange) comprises this social relation.

Geographic research on capital has focused largely on the flow and availability of capital for investment and on the role of the social relations created by capital in creating patterns of uneven economic development and environmental impacts at the individual, local, regional, and global scales.