<div class='quotetop'>QUOTE(Tulac @ Jun 8 2006, 11:15 AM) [snapback]235232[/snapback]</div>
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No capital is everything that can be produced and is used for production of other products a PC for instance(producing web sites), this doesn't have to do anything with making a living, you can make a living without producing anything, like if you were a waiter...
Money produces nothing, it can be invested in capital goods which will then be used for production of other products, but it can also be spend for consumer goods which only get consumed...
Also human work isn't capital because you can't produce it, neither is land but they are inputs and are also used in production...
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I'm starting to sound like a broken record here: money is known as financial capital or as liquid capital and
is a factor of production. Adam Smith referred to it as "circulating capital" in the
Wealth of Nations:
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Originally posted by Adam Smith+--><div class='quotetop'>QUOTE(Adam Smith)</div>
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There are two different ways in which a capital may be employed so as
to yield a revenue or profit to its employer.
First, it maybe employed in raising, manufacturing, or purchasing goods, and selling them again with a profit. The capital employed in this manner yields no revenue or profit to its employer, while it either remains in his possession, or continues in the same shape. The goods of the merchant yield him no revenue or profit till he sells them for money, and the money yields him as little till it is again exchanged for goods. His capital is continually going from him in one shape, and returning to him in another; and it is only by means of such circulation, or successive changes, that it can yield him any profit. Such capitals, therefore, may very properly be called circulating capitals.[/b]
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and reiterated by David Ricardo in his On the Principles of Political Economy and Taxation:
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...on the contrary, a shoemaker, whose capital is chiefly employed in the payment of wages, which are expended on food and clothing, commodities more perishable than buildings and machinery, is said to employ a large proportion of his capital as circulating capital.
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To be very clear before someone attempts to note it: the circulating capital employed by the shoemaker is money whereas it is the employees of the shoemaker who convert it to other goods.
Financial capital is used in production insofar as it is converted into or used in the procurement of fixed capital, labor, land, and so-on.