University of Hertfordshire

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What is capital? Economists and sociologists have changed its meaning - should it be changed back?

Research output: Contribution to journalArticlepeer-review


  • 906912

    Accepted author manuscript, 148 KB, PDF document

  • G.M. Hodgson
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Original languageEnglish
Pages (from-to)1063-1086
Number of pages24
JournalCambridge Journal of Economics
Early online date4 Apr 2014
Publication statusPublished - 30 Sep 2014


This article traces the historical usages of the term capital and the explosion of different types of supposed 'capital' in the twentieth century, including 'human capital' and 'social capital'. In medieval and early modern times, capital meant money investable or invested in business. This meaning persists in business circles today. In contrast, Adam Smith treated physical assets, machines and people as 'capital' and this different usage has dominated economics since. The pre-Smithian meaning referred to money or other saleable assets that could be used as collateral. This article questions the change in meaning by economists and sociologists and highlights the importance of collateralisable property for capitalism. 'Human capital' can only be collateral if the humans involved are slaves. 'Social capital' can never be used as collateral and it is not even owned. These important issues are masked by the broadened notion of 'capital'. Given the conceptual problems involved, economists and sociologists should consider returning to the pre-Smithian and surviving business usage of the term.


This is a pre-copyedited, author-produced PDF of an article accepted for publication in Cambridge Journal of Economics following peer review. The version of record: Geoffrey H. Hodgson, 'What is capital? Economists and sociologists have changed its meaning: should it be changed back?', Cambridge Journal of Economics, Vol.38(5):1063-86, September 2014, is available online at:

ID: 7612881