Next up: Capital. The thing that names Capitalism.

I described in the last post what currency is. Again, let's build on top of that.

We are still building our own micro-society. It has the necessity of measure trust (Money), it has adopted some thing to transfer wealth (Currency), now we must manage the resources used to produce goods and services, or Capital for short.

I found online many definitions and types for Capital, but for simplicity lets list three: Land 🏞, Money 💰 and Labor 👩🏾‍🌾.

If you are an actor in our island small society 🏝 and you own land, you can use that land to produce something extra to the community; Or you may have excess money which you borrow for a fee to others who need it now; Or even you use your time and expertise as a smart worker to create something that didn't exist before.

Whenever you employ something you own to produce another thing to the society, you are using your Capital to produce goods and services.

Owning Producing Assets

Anythin you own could be employed productively to generate more Capital for yourself. Your land could be used to build a business office, which combined with your specific talent can generate revenue streams to you and the shareholders.

The money you have excess, meaning the amount of currency units you accumulated from the good things you produced in the past, can be borrowed to others who need capital to produce their stake in the economy.

Even if you had a robot or piece of software that automises a process for you, it can also be considered as a producing asset, and the time it saves for you is the capital you gain.

Understanding what is Capital and Producing Assets is crucial to start your journey in wealth creation, because wealth is made of assets, not currency. If you always focus on acquiring (and not selling) assets, you will benefit from the compounding effect that the employment of capital has.