Market Participation and Economic Capital

Abstract

The market economy supports human wellbeing. This chapter offers evidence for this observation, while recognising that markets need rules, customs and institutions to work well. A key market institution is the firm, which combines different types of capital to maintain specialist capabilities for supplying goods and services valued by their customers. This expands the potential for wellbeing, but a large number of jobs pay less than the real living wage, with a strong gender bias, which diminishes wellbeing. The chapter analyses economic capital, comprised of physical capital and financial capital. Growth in economic capital has increased material living standards for billions of people, but recent economic development is also associated with cumulative environmental damage, episodes of financial instability and greater concentration of wealth.