Sociology Index

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CAPITAL ACCUMULATION

Capital accumulation is the process of accumulating resources for use in the production of goods and services. Capital accumulation, as explained by Ludwig von Mises, is wealth that is created and owned by businesses and individuals. The only way to raise real wages is to increase the per capita amount of Capital invested by increasing capital accumulation. To accomplish this it is first important to understand what is meant by capital accumulation. Human Capital Accumulation is now regarded as a prime engine of growth. Capital accumulation is a dynamic that motivates the pursuit of profit, involving the investment of money or a financial asset for the purpose of making more money.

The process of capital accumulation is the basis and one of the defining characteristics of capitalism. Capital accumulation is directly linked to profitability: the resources used to make commodities can be replaced and augmented when the commodity is sold for a profit. Capital accumulation can also take place in the public sector, where, from a structuralist approach within a conflict perspective, the state is seen as performing the function of aiding in the accumulation of private capital. Capital is accumulation of goods or wealth used for the production of other goods and services rather than for immediate or personal use.

Other than economic or financial capital, we also have human capital, social capital or individual capital. Private capital accumulation occurs when productive capacity exceeds the immediate needs for consumption. A farmer can accumulate capital (stored grains, improved equipment) during years of good harvests and good farm revenues. Weber and Schumpeter argue that a healthy capitalism requires economic and non-economic institutions. This function may be performed by the state providing an educated work force, building rail lines into resource areas, maintaining a legal system to resolve contract disputes and providing tax incentives or tax breaks.

Diverging Waves of Capital Accumulation, Black Capital Formation and the Specificities of Black Capitalism: From B.T. Washington, W.E.B. DuBois, to Harold Washington and Beyond - Thomas, Darryl - Paper presented at the annual meeting of the Midwest Political Science Association 67th Annual National Conference
Abstract: This paper examines the Golden Age of Black Capitalism with the making of US Empire in the 19th/20th centuries and the recent 21st century US Empire. It draws attention divergent waves of capital accumulation and the segregationist economic models and Jim Crow Business models they spawn as well as the post-Fordist and globalization model of black capital formation.

Capital Accumulation and Growth: A New Look at the Empirical Evidence
Bond, Steve, Asli Leblebicioglu, Fabio Schiantarelli.
Abstract: We present evidence that an increase in investment as a share of GDP predicts a higher growth rate of output per worker, not only temporarily, but also in the steady state. These results are found using pooled annual data for a large panel of countries, using pooled data for non-overlapping five-year periods, or allowing for heterogeneity across countries in regression coefficients. The evidence that investment has a long-run effect on growth rates is consistent with the main implication of certain endogenous growth models, such as the AK model.

The Stock Market and Capital Accumulation - Robert E. Hall.
Abstract: The value of a firm's securities measures the value of the firm's productive assets. If the assets include only capital goods and not a permanent monopoly franchise, the value of the securities measures the value of the capital. Finally, if the price of the capital can be measured or inferred, the quantity of capital is the value divided by the price. A standard model of adjustment costs enables the inference of the price of installed capital. Data from U.S. corporations over the past 50 years imply that corporations have formed large amounts of intangible capital, especially in the past decade.

Capital accumulation and unemployment: new insights on the Nordic experience
Marika Karanassou, Hector Sala and Pablo F. Salvador.
This paper takes a fresh look at the analysis of labour market dynamics and argues that capital accumulation plays a fundamental role in determining unemployment movements. This role has generally been examined by considering indirect transmission channels of the capital stock effects, i.e. using variables like interest rates or investment ratios in the NAIRU framework. Here we advocate a different approach.

Solow and the States: Capital Accumulation, Productivity and Economic Growth
Douglas Holtz-Eakin
Evidence from the states suggests that the effects of capital accumulation are consistent with the predictions of the neoclassical growth model. At the same time, the estimates indicate a substantial role for human capital accumulation in raising productivity, in contrast to the neoclassical focus on physical capital investment.