Key questions on how many forms of capital we need to measure and manage
Although money is commonly referred to as capital, technically speaking capital is a resource used in creating value. Money is certainly useful as a medium for exchanging different forms of value. But paper bills, coins, credit cards, digital accounts, etc. are not, in themselves, material sources of value.
Instead, we must focus on aligning measured amounts of value-creating resources we manage with the costs we incur in producing that value. In the same way that manufactured capital is measured and managed in the terms of the Systeme International d'Unites (the SI Units, commonly called the metric system), so, soo, do we need analogous standardized metrics for human, social, and natural capital.
A primary goal, then, is to meaningfully quantify what we manage at each level of complexity and in ways useful within each of the four primary domains (science, law, finance, and communications). Tailoring the science to the needs for property rights, accounting standards, and meaningful communications, and then feeding back from each of those to the others, gets the co-evolutionary ball rolling.
It is expected that sorting out the theory and methods involved in modeling, estimating, measuring, and standardizing human, social, and natural capital will involve controversy and contentious debates. Though the relevant theory and methods of an unmodern perspective resolving the modern vs postmodern "culture wars" have been available for decades, few are aware of how to separate and balance the needs for respecting individual differences in the context of communicable standards. One of the purposes of mounting this demonstration project is to provide tangible lived experiences of simultaneously general and specific forms of sustainable development.
Human capital may fall into four to eight broad areas, depending on how they are defined: physical, cognitive, socio-emotional, and moral development and health.
Social capital encompasses a similarly broad range of areas that may prove to comprise a number of possible constructs: trust/loyalty/commitment, security, safety, rule of law, leadership, organizational and governance, etc.
Natural capital, like human and social, spans multiple types of ecosystem services, including those provided by watersheds, estuaries, forests, fisheries, the atmosphere, etc., where the effects of pollution are gauged in terms of the effect on the optimal functioning of the ecosystems.
Copyright 1995-2023 Living Capital Metrics Last updated 10 May 2023.