To an economist, capital means machines and buildings, not money
Ask an economist about capital and you may hear about lathes, oil rigs and data centres rather than bank balances. In economics, capital goods are durable things people have made in order to make other things, from a factory's machinery to a wind turbine or a semiconductor plant.
The key word is durable. Raw materials, components and the energy burned in production are intermediate goods: used up or built into the product in a single round. Capital keeps delivering, cycle after cycle. A nation's capital stock at any moment includes its buildings, equipment, software and inventories, and modern definitions count intangible assets alongside physical ones, so the stock is a very mixed collection. Depreciation, the gradual wearing out of that equipment, is the one part treated as a running business expense.
Since the classical economists, capital has been ranked as one of three factors of production, alongside labour and land or natural resources, and it appears as an input in standard production equations. In the classical view, things like organisation, know-how, goodwill and management fall outside these three as intangibles, sometimes described as talent or social capital.
Capital is both an input and a product. Machine tools, buildings and software must themselves be made, usually by specialist firms rather than the companies that will use them. Such goods tend to be one-off, capital-intensive assemblies of many parts, typically produced as projects involving networks of cooperating firms.
Karl Marx approached the subject differently, treating capital as a social relationship rather than a timeless feature of economies. He split it into constant capital, the machinery and other goods; variable capital, the wages paid for labour, which change with how much work is bought; and fictitious capital, paper claims such as shares and bonds that stand for real assets. Even among mainstream economists, how to define capital, how to add it up across an economy and how productive it really is have been argued over for as long as the discipline has existed.
Source: Capital (economics)
