THE RELATION BETWEEN STATICS AND DYNAMICS 65 
12. The Concept of Capital 
The shift from the static to the dynamic point of view has 
quite far-reaching effects on many of the fundamental concepts, 
of which we may take, as examples, the concepts of capital and of 
production. The term capital really applies to a rather large 
family of ideas, as can be easily seen. Some writers have attached 
the term to one of these ideas and some to another, and dynamics 
must solve their controversies by including all these ideas as parts 
of the process, or institution, to which its studies are directed. 
And certain things which no one has included in the definition 
of capital are still such vital prerequisites that they become 
essential parts of the picture which the term must convey to 
anyone studying it from the dynamic standpoint, as a process 
or institution. 
One of the essential starting-points is a productive idea. Ideas, 
knowledge, habits and customs of the shop and market-place, 
constitute a vitally important form of social capital: possibly 
the most vital form. Without it, nothing else can have value. It 
is in the main a common heritage, but differential advantages are 
elements of private wealth, and the whole is far from being a 
“free good.” 
Of joint importance with this is the “waiting” or abstinence 
of the original saver. And some writers make “waiting,” rather 
than physical or financial capital, the third great factor of pro- 
duction, using it for the purpose usually assigned to capital in the 
general theory of distribution. 
As the result of waiting, there is a fund of purchasing power 
destined to investment. Related to this is a fund of lending and 
investing power in the hands of financial institutions. Being 
invested, this becomes a quantity of purchasing power in the 
hands of an entrepreneur who is looking to spend it on productive 
assets. All these are forms which capital takes, and while only 
a part of capital is in any of these forms at any one time, it is 
that peculiarly mobile part by which marginal adjustments are 
typically made, and thus holds a particularly strategic position. 
Another obviously essential part of the process is the existence 
of supplies of “capital goods” or productive assets which the 
entrepreneur wishes to buy and use. These are, of course, capital 
in the enterprises that make them; but their availability condi- 
tions the dynamic behavior of capital in the industries which buy