Capital as a factor of production, according to Marx's theory, is a fairly complex concept. Outwardly, it can act in certain forms: permanent (means of production), money (money), variable (people) and commodity (goods). However, these material carriers are not just capital, but are represented by production relations.
First, capital as a factor of production is a self-increasing value that is created by wage-workers. Secondly, capital is a movement, a process of circulation, going through various stages. This is a process that involves three forms of circuit. Capital as a factor of production is a change in the forms of value. For example, the money form is replaced by commodity, then - production, and again commodity and money. Thirdly, capital is not a thing. This is a certain social attitude, presented in a thing with giving it a specific social character.
Capital as a category
Capital - a resource of long-term use, which is created to produce a significant number of goods and services. The creation of additional benefits in the future tense assumes certain resource costs today. Therefore, often there is a problem of commensurability of the benefits that can be used in different periods. Capital as a category can express a certain amount of money, material and intellectual resources, allowing their owner to carry out entrepreneurial activities. At the same time, capital is inseparable from social relations, in the existence of which such activities function. Therefore, it serves as the core of the entire market system.
Accounting and economic definitions of capital
There are other definitions. Thus, in accordance with the accounting definition, all assets of a business entity are recognized as capital. According to the economic definition, capital is divided into real, monetary and commodity.
History of occurrence
Theories of profit and capital have a long history. With the help of them the main core of a large number of economic theories is formed. Thus, Smith characterized capital as an accumulated stock of money or things. Ricardo saw this concept as a means of production.
And only Marx viewed capital as a factor of production, in the form of a social category. He argued that capital is a self-increasing value that generates surplus value. According to Marx's theory, money can become capital only if labor and means of production are bought on them. At the same time, as the creator of surplus value, he called the work of hired workers. Profit is the transformed form of the increment of value, considered as the creation of all capital.
Features of the human factor
There is another component of any production process - labor, which is inseparably connected with a person. Therefore, the human factor of production is represented by both intellectual and physical activity, with a focus on the production of goods, as well as the provision of services. The totality of certain abilities of any person, conditioned by special education and professional training, and form human capital. At the same time, capital and qualifications are directly dependent. From their effective interaction depends also the income on this capital in the form of wages. Today, investments in people are the fastest-paying and efficient production costs. In modern conditions of management, the theory of risk occurrence, based on the need for certain funds that are required to carry out economic activities and is capable of yielding either income or loss, is prevalent. Thus, an employee has a risk of losing only a job, and the employer is at risk of losing capital.
Definition of entrepreneurial ability
Entrepreneurial activity is a specific factor of production and involves the effective use of savvy, initiative and risk in this process. Entrepreneurial ability as a factor of production is a special kind of human capital, which is represented by the activity of combining and coordinating other production factors in order to create services and benefits. The specificity of this type of human resource consists in the desire and ability to introduce various innovations (innovations) in the form of a new manufactured product, modern technologies and forms of business organization with a certain degree of risk and the probability of incurring losses in the production process. By its scale, entrepreneurial activity can be equated with the costs associated with the use of highly qualified labor. There are also various theories that treat this concept. So, the English economist Cantillon as an entrepreneur was a person with non-fixed incomes. He has the ability to buy other people's products at a fixed price, which is not yet known to him. Therefore, risk is the main distinguishing feature of an entrepreneur.