Over the course of the last three decades, a wide range of different forms of valued constructs, domains, factors, or variables have come to be referred to as capital. And so now it is common to hear of human capital, social capital, political capital, community capital, literacy capital, numeracy capital, natural capital, etc.
It has been suggested that the usual 3-capitals model (land, labor, and manufactured capital) be expanded to a 4-capitals model (natural, human, financial, and manufactured) so as to both enrich the conceptualization of capital as well as to provide a more comprehensive basis for accountability (Hawken, et al., 1999, p. 4). Ekins (1992, pp. 48-61) also suggests a four-capitals model, but sets liquid capital aside as a means of obtaining any form of capital, and breaks social capital off from human capital as distinct and important enough to require a separate focus. Ekins’ categorization will be employed here.
Human capital is far more diverse and valuable than the reduction to
labor alone can express, for instance, just as natural capital offers a
variety of essential processes and products that amount to much more
than the mere value of land. The value of labor in an economy is
composed a wide variety of abilities, skills, and motivations that must be appropriately measured to be nurtured and grown. And to be effectively managed as a living capital resource,
land is better conceptualized as the complex ecologies that support air
and water purification, replenish fisheries, maintain genetic
diversity, etc.
In addition, social capital has been described as perhaps being more
important to the success of capitalism than any physical form of
capital. This is rightly so, since it seems
likely that social capital’s components of trust, loyalty, and good
will provide the context of a nurturing environment in which any other
form of scientific or political capital is brought to life.
Social capital’s element of trust is built up as dialogues involving
individual people, data sets, tool designs, etc. illuminate the
outlines of broader methodological and conceptual principles. This is
as true in the dynamic emergence of new criteria for comprehensive,
living capital accountability as it is anywhere else. Distrust is
engendered when comprehensive capital accountability seems to radically
shift the cost of capital by suddenly introducing human, social, and
natural capital into the picture in new ways.
Because current capital accounting systems are exclusively concerned
with liquid and manufactured capital, the economic picture is grossly
distorted when we simply add in these new capital costs with no way of
transforming them into investments with potential returns fed back on
the investors. New accountability systems associated with new networks
of incentives and rewards are needed if we are to integrate all four
forms of capital into a comprehensively manageable economics that
focuses on the removal of inefficiencies.
Little attention has yet been paid to the metrical mysteries of social
capital or any of the other new forms of capital that have recently
emerged. Far from being esoteric academic exercises divorced from data
or practical application, the purpose of focusing attention on these
issues combines theory with experiment, and mathematical beauty with
pragmatic utility.
Will it be possible to see all of the forms of capital through their
birth in the manner of philosophy’s ancient Socratic midwife, checking
to see that they are fully formed and able to live independent lives?
What would it mean to measure the properties of these forms of capital
and bring them to life in a manner analogous to the way the geometrical
surveys of property incorporated in titles and deeds bring it to life
as fungible capital?
Copyright 1995-2023 Living Capital Metrics Last updated 10 May 2023.
