Marshall says “capital consists of all kinds of wealth other than free gifts of nature, which yield income”. Bohm-Bawerk defines it as ‘a produced means of production’. As said earlier, capital is a secondary means of production. It refers to that part of production which represents ‘saving used as investment’ in the further production process. For example, the entire mango is not eaten; a part of that (its nut) is used to produce more mangoes.
It is a stock concept. All capital
is wealth but all wealth is not capital.For example, tractor is a capital asset which can be used in cultivation (production) of farm, but due to some reason the same is kept unused (idle) for some period.It cannot be termed as capital for that period. It is only wealth.
Characteristics of Capital:
* Capital is a man-made factor. * Capital is mobile between places and persons.
* Capital is a passive factor of production.
* Capital’s supply is elastic.
* Capital’s demand is a derived demand.
* Capital is durable.