Chapter Content
Okay, so, like, let's dive into this whole thing about capital, right? It's kinda funny how we've stretched the word "capital" to cover, like, everything these days. You hear about, like, intangible capital, human capital, social capital, natural capital... even surveillance capital. It's like, if you want something to be taken seriously, you gotta slap the "capital" label on it, you know? I wonder what Marx would even think, honestly.
So, like, companies, especially the big ones like Apple and Amazon, they're valued way more than just their, you know, buildings and equipment. People say, "Oh, it's their intangible assets!" But, like, what does that even mean? Usually they point to research and development or brand value.
Now, R&D... you picture scientists in labs, right? And, okay, sure, that's important. But even in, like, the techy companies, it's mostly about, like, tweaking things, improving stuff bit by bit. Apple and Amazon, they're not necessarily making huge breakthroughs, more like, combining existing ideas in new ways, you know? It's almost impossible to say, like, "This is our R&D department and this is what it cost to make this one product."
And when governments offer tax breaks for R&D, you need, like, special consultants to even figure out what counts. Like, back in the day, with General Motors, you could directly link the cost of a production line to the number of cars coming out. But now? It's so vague. Like, what percentage of Apple's value comes from past R&D? Impossible to say.
Then there's "human capital," right? When execs say, "Our people are our greatest asset," they're probably thinking about, like, the collective intelligence of the employees. It's their ability to solve problems, create new stuff, build relationships with customers and suppliers. That's the real competitive advantage, you know?
But, it's important to remember that saying "Our people are our greatest asset" wasn't always innocent. I mean, slave owners used to say the same thing. It took a while before people could say it without, like, feeling weird, because, well, "our people" aren't "our property" anymore. They can leave! Big difference.
And it's true, like, there are some similarities between human capital and physical capital. You invest in education and training, it pays off later, and it needs maintenance. But, you can rent human capital, you can't buy or sell it. Even back in the day when slavery was legal, you were buying labor, not the person's brainpower. And also, education is good for society, not just for the person getting the education, you know? It helps people be good citizens.
Like, people would kill to get into Oxford, right? They need to get loans to finance their education, which can be valuable but it's also kind of a way of showing they're able to get in, to have that qualification. Whether the human capital created by formal education is developed or expressed, the product of education belongs to the student.
So, education is good, but the human capital, it's also developed within companies. And some of that is general, like learning skills in an apprenticeship. And some is specific, like learning the specific way your company does things. Like, Old Macdonald's farm raises beef, McDonalds restaurants will serve a Big Mac and McKinsey will deliver a Powerpoint presentation.
Then we get to "social capital." The networks, norms, and trust that allow people to work together effectively. It's, like, super important for companies, for building that collective intelligence, but also for society in general. I mean, society is made up of individuals, but also communities, right?
And social capital seems to play a huge role in regional success. Like, the industrial areas of Italy are known for their productivity, while others aren't. A long time ago, someone noticed that a lot of American life involves association. So, they created a civic society in which agency was no longer polarized between the individual and the state.
So it’s worth remembering that the decline of social capital and voluntary activity in the late 20th century came about just after so much thinking has been about polarising the individual and the state.
Okay, but here's the thing about "social capital": it's not really "capital" in the traditional sense. No one owns it, you can't trade it, it doesn't depreciate. And it's hard to measure. But one way to measure it is generalized trust: do people think most people can be trusted?
And finally, we have "natural capital." Which is, like, the natural environment's contribution to the economy. It includes natural resources, land, ecosystems... all that stuff.
And it's admirable to try and account for that. But measuring it? It's, like, kinda crazy. Like, they try to put a dollar value on the British countryside based on, like, recreation and tourism. But if you walk to the park for free, it doesn't count. If you drive there and buy stuff, it does. If the oil price rises, the hills are worth more, that is until it's too expensive to go at all. And if someone cuts down an iconic tree? That's worth a certain amount too.
It is useful to recall the observation of an economist from Chicago, who noted that insistence on a concretely quantitative economics means the use of statistics of physical magnitudes, whose economic meaning and significance is uncertain and dubious.
So, really, I think people are just trying to make things sound important by calling them "capital." "Capital" is important. But we should use the word more carefully, you know?