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Capital Currency Pair

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					Capital


          Dr Will Harvey
           Structure of Lecture
• Fixed and circulating capital
• Financial capital
• Human capital
• Social capital
• Cultural capital
• Conclusions
       Fixed and Circulating Capital
• In his Wealth of Nations book,
  Adam Smith distinguished
  between:
   - fixed capital:
        a portion of the total capital
        that is invested in fixed assets
        like buildings and vehicles
             e.g. bricks in a house
   - circulating capital
   items that are used up in the
  process of creating other goods or
  services
           e.g. petrol in a car
          Factors of Production
• In classical economics, there are three factors of
  production:
1. Capital – can be used in the production of other
   goods.
2. Land – naturally occurring resources.
3. Labour – measure of the work done by humans.
• In neoclassical economics, capital was also
  considered a ‘stock’, meaning that its value could
  be estimated at a point in time.
Factors of Production
   Economic and Financial Capital
• Economic capital is wealth either inherited or
  generated from interactions between individuals and
  the economy.
• Financial capital represents obligations and is
  liquidated as money for trade, and owned by legal
  entities.
• It is in the form of capital assets and traded in
  financial markets.
• Its market value is based on the perception by the
  market of its expected worth as well as the risk
  entailed.
Old Pyramid of Capitalist System
New Pyramid of Capitalist System
                           Money
• Money is:
   - any object that is used for the
  payment of goods and services
   - medium of exchange
   - unit of account
   - repayment of debts
• Almost all money is ‘fiat money’,
  meaning that it:
   - derives its value by being
  declared legal tender by a
  government
  - must be accepted as a form of
  payment within a country
                   Money Supply
• The money supply of a country
  consists of:
   - currency (e.g. banknotes and coins)
   - demand deposits (e.g. cheques and
   savings)
• Typically, much greater amounts of
  money supply is represented by
  demand deposits than currency.
• Although demand deposits are
  intangible, it still fulfils the same role
  as money.
                     Human Capital
• Human capital is the knowledge,
  skills and competencies held within
  individuals.
• These attributes within individuals
  allow them to perform work which
  generates economic value.
• Human capital is the skills acquired
  through prior education and training.
• In neoclassical economics, the Nobel
  Prize Winning Economist, Gary
  Becker, wrote a book entitled Human
  Capital, which became a standard
  reference for this subject for many
  years.
     Gary Becker and Human Capital
• Becker saw human capital as similar
  to physical means of production
  such as factories in terms of
  investment.
• He argued that people can invest in
  their education and training in order
  to gain a return in the labour
  market.
• In other words, greater investment
  in human capital yields greater
  output.
      Introducing Social Networks
• Social networks are the social relationships between different
  actors:
   - countries (macro)
   - firms (meso)
   - individuals (micro)
• Only since the 1970s has the analysis of social networks been
  rigorously theorised rather than applied merely as a
  descriptive tool.
• Scholars argue that there has been a lack of emphasis on
  individual social networks (Ettlinger, 2003; Grabher and Ibert,
  2006).
Social Networking Websites
                   Social Capital
• Social capital is when individuals invest in their social
  relationships with different people and expect a return
  in the marketplace (Lin, 2001):
   - trust is an important component of social capital
• Social networks enable individuals to gain access to the
  resources of their friends and associates (Bourdieu,
  1985):
   e.g. loans and investment advice from people within
   their social network
• Arguably social capital reproduces inequality because
  people rise to powerful positions through employing
  social connections.
Building Social Capital
                   Social Structures
• Certain types of social
  structures can encourage or
  restrain participation in social
  networks.
• In an open structure, an
  individual, A, might have
  social relations with two
  other actors, B and C, who
  are not connected.
• In a closed structure, all
  members are connected.
• If A is acting inappropriately
  then B and C can impose
  collective sanctions in the
  closed, but not the open
  structure.
                      Homophily
• Homophily is the argument that people tend to have
  significant social contact with people who hold similar social
  characteristics to themselves (Lazarsfeld and Merton, 1954):
   e.g. age, gender, class, education, ethnicity or occupation
• British expatriates in Singapore tended to socialise with and
  live near to other expatriates and ‘westernised’ Singaporeans:
   - they avoided Singaporeans in their home space
   (Beaverstock, 2002)
• The same trend was found with highly skilled migrants moving
  between Hong Kong and Vancouver (Waters, 2007).
      Homophily and the Workplace
• The higher the position a
  person holds within a firm,
  the stronger the homophily
  principle (Lin, 2001):

   - as workers enter more
   senior positions they are
   more likely to hold
   networks with people
   with similar social
   characteristics:

       N.B. strength of
       weak ties                Source: McPherson et al. (2001)
 Recapping on Social Networks and Social
                Capital
• Social networks:
http://www.youtube.com/watch?v=6a_KF7TYKVc
• Social capital:
http://www.youtube.com/watch?v=ND7UgjXHenY
• Networking within the classroom:
   - ask me questions for two minutes
   - try and gain some value from the conversation
Cultural Capital
   The binary of Economy and Culture
• Economy and culture are typically interpreted as a binary.
• Derrida talked about ‘logocentrism’:
   - dividing language into opposite pairs of terms:
       - the economy is seen as positive
       - culture is everything the economy is not
• Economy: hard, masculine, masterful, about facts.
• Culture: soft, feminine, submissive, values.
• This separation of economy and culture has led to different
  areas of inquiry within the social sciences (Barnes, 2005).
              Hybrids of Culture and Economy
                      (Barnes, 2005)
                        1. Christmas
- Celebrating the birth of Jesus
   Christ
- Spending time with family and
   friends
- Eating and drinking special things
- Participating in particular rituals
* Receiving presents
* Shopping sales
* TV adverts and mass
   consumption
* Overdrawn credit cards
                  2. The Sex Pistols
• English punk-rock band that became
  popular in the mid-1970s:
  - LP: ‘Never Mind the Bollocks’
  - Sold under brown wrapping
• Defined a wider youth sub-culture –
  punk:
  e.g. ripped clothes, dyed hair, Doc
  Marten boots, safety pins, specialist
  language and vocabulary, broader
  philosophy and politics (Savage, 1993).
• The band were about making money:
  - selling a product, making profits for
  their sponsors
                 3. Piece of Lumber
• Culture infuses every stage of plank making
  and selling.
• Since European settlement in BC in the
  mid-19th century, the mastering of forests
  has been significant:
   - BC Royal Commissions on forestry (1945)
   - single industry towns
• The culture of work:
   - Fordism to post-Fordism
   - highly masculinised (c. 90% male)
   - patriarchal norms
   - boys less interested in education –
  presuming a job in the mills
                Cultural Capital
• Cultural capital are non-financial social assets such as
  intellectual achievements, which can promote social
  mobility beyond someone’s financial means.
• The term was first introduced by Pierre Bourdieu and
  Jean-Claude Passeron when they used social capital
  in "Cultural Reproduction and Social Reproduction"
  (1973).
• Cultural capital acts as a social relation within a
  system of exchange and the term is extended to all
  goods that are rare and in demand within social
  contexts.
    Bourdieu and Cultural Capital
• What Bourdieu argues is that cultural capital is a
  product of an investment people make, which they
  can secure a return from.
• He argues that cultural capital perpetuates social
  inequalities.
• For example, he would argue that academic success
  is not a result of natural aptitudes such as
  intelligence.
• For him, ability is socially constructed and the net
  result of an investment in time and cultural capital.
                Linking Capitals
• Cultural capital is a relational concept and exists
  alongside other forms of capital such as social,
  political and natural.
   Summarising Cultural Capital:



• http://www.youtube.com/watch?v=FBn28iNcpBA
                Conclusions
• This lecture has presented a range of
  important types of capital.
• The aim has been to demonstrate that when
  we think about capital we should try and think
  beyond purely economic and financial capital.
• There is a wealth of material on capital not
  only in economics, but also in other social
  science disciplines such as business, sociology,
  geography, anthropology and political science.
Thank you and any questions?

				
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Description: Capital Currency Pair