Capital Currency Pair by MikeJenny


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          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
   - 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
           e.g. petrol in a car
          Factors of Production
• In classical economics, there are three factors of
1. Capital – can be used in the production of other
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
• 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
Old Pyramid of Capitalist System
New Pyramid of Capitalist System
• 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
  - 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
• 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
• 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
     Gary Becker and Human Capital
• Becker saw human capital as similar
  to physical means of production
  such as factories in terms of
• He argued that people can invest in
  their education and training in order
  to gain a return in the labour
• In other words, greater investment
  in human capital yields greater
      Introducing Social Networks
• Social networks are the social relationships between different
   - 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,
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,
   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
• 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
• 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

       N.B. strength of
       weak ties                Source: McPherson et al. (2001)
 Recapping on Social Networks and Social
• Social networks:
• Social capital:
• 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
- Spending time with family and
- Eating and drinking special things
- Participating in particular rituals
* Receiving presents
* Shopping sales
* TV adverts and mass
* 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 –
  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"
• 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
    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
• For example, he would argue that academic success
  is not a result of natural aptitudes such as
• 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:

• 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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