Empirical methods Prescriptive and policy Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of profit, rent, interest, royalties or capital gains.
Capital accumulation refers ordinarily to: and by extension to: Both non-financial and financial capital accumulation is usually needed for economic growth, since additional production usually requires additional funds to enlarge the scale of production.
Accumulation can be measured as the monetary value of investments, the amount of income that is reinvested, or as the change in the value of assets owned (the increase in the value of the capital stock).
Using company balance sheets, tax data and direct surveys as a basis, government statisticians estimate total investments and assets for the purpose of national accounts, national balance of payments and flow of funds statistics.
) are regarded as critical factors for accumulation and growth, assuming that all saving is used to finance fixed investment.
However, as Keynesian economics points out, savings do not automatically mean investment (as liquid funds may be hoarded for example).
The Harrodian model has a problem of unstable static equilibrium, since if the growth rate is not equal to the Harrodian warranted rate, the production will tend to extreme points (infinite or zero production).
[5] For its turn, the model of the Sraffian Supermultiplier grants a static stable equilibrium and a convergence to the planned capacity utilization.
Here, capital is defined essentially as economic or commercial asset value that is used by capitalists to obtain additional value (surplus-value).
This requires property relations which enable objects of value to be appropriated and owned, and trading rights to be established.
Marx argued that capital has the tendency for concentration and centralization in the hands of richest capitalists[8] According to Marxism during periods of stagnation in capitalism, the accumulation process is increasingly oriented towards investment on military and security forces, real estate, financial speculation, and luxury consumption.
Capital accumulation of the means of production in Marxist thought leads to the formation of the bourgeoisie.
[9][10][11] "Accumulation of capital" sometimes also refers in Marxist writings to the reproduction of capitalist social relations (institutions) on a larger scale over time, i.e., the expansion of the size of the proletariat and of the wealth owned by the bourgeoisie.
Marx believed that this cyclical process would be the fundamental cause for the dissolution of capitalism and its replacement by socialism, which would operate according to a different economic dynamic.
If economic growth is shared unevenly between different groups of the population wealth inequality emerges.