New Perspectives on Capital, Work, and Wealth

Abstract

In the last chapter I pointed out how neo-classical economics evolved and why it neglects resources, including the prime mover of all, which is energy. In this chapter I will attempt to repair those omissions. For a start, it is useful to think of capital in energetic terms by making a distinction between “active capital” and “passive capital”. For animals the active components are muscles, the digestive system, the cardio-vascular system and the brain, while the passive components are bones and skin. In the economy the active components are human workers (actually only their eyes, hands and brains) plus information processing equipment (computers, telephones etc.) and power-projection equipment consisting of engines, motors, generators, and machines with moving parts. Passive capital in the economy consists of structures that exist mainly to support, contain and protect the active capital equipment. The latter also includes “infrastructure” (roads, rails, bridges, tunnels, harbors, pipelines, electrical transmission lines). It also includes knowledge and intellectual capital.