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What are the different types of Capital?

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posted Jul 18 by Sagar Sharma

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There are five types of capital from where we derive the goods and services we need to improve the quality of our lives.

Natural Capital is any stock or flow of energy and material that produces goods and services. It includes:

Resources - renewable and non-renewable materials
Sinks - that absorb, neutralise or recycle wastes
Processes - such as climate regulation
Natural capital is the basis not only of production but of life itself!

Human Capital consists of people's health, knowledge, skills and motivation. All these things are needed for productive work. Enhancing human capital through education and training is central to a flourishing economy.

Social Capital concerns the institutions that help us maintain and develop human capital in partnership with others; e.g. families, communities, businesses, trade unions, schools, and voluntary organisations.

Manufactured Capital comprises material goods or fixed assets which contribute to the production process rather than being the output itself – e.g. tools, machines and buildings.

Financial Capital plays an important role in our economy, enabling the other types of Capital to be owned and traded. But unlike the other types, it has no real value itself but is representative of natural, human, social or manufactured capital; e.g. shares, bonds or banknotes.

answer Jul 19 by Shantanu Arora
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