Capitals and capabilities
(2004) Tom Schuller, John Bynner and Leon Feinstein
WBL Discussion Paper (04-01)
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There has been a gradual extension of the economists' term 'capital' to embrace social, cultural and psychological as well as human and financial assets available for investment. This development raises the question of whether the properties that economists attribute to capital meaningfully extend to these wider usages. The development economist Amartya Sen has introduced the different but related notion of 'capability' to describe the potential to achieve desired levels of functioning in the different domains of life. There are clear but insufficiently explored parallels between this notion and those inferred by the different forms of capital.
This paper is part of the ongoing programme of research being conducted by the Centre for Research in the Wider Benefits of Learning, and stimulated by work done for a Smith Institute seminar on 'Wealth' in 11 Downing Street. The paper describes essential elements of the notion of capital in the usage of economists, factors such as: the property of being invested in; measurability; ownership; returns and; fungibility. Capabilities, on the other hand, are conceptualised as inputs to the production of capitals and also the returns to them in the wider sense (i.e. social and personal as well as economic).The final section considers the links between the two notions and addresses the policy implications of the debate. The aim is to stimulate discussion on the validity and usefulness of the term capitals and capabilities for describing these important resources and to ask which term is more useful in the different contexts in which they might each be applied.
