Capital accumulation

The accumulation of capital refers to the accumulation of capital goods, financial capital and human capital.

One of the first economists to refer to the concept was Adam Smith in his book The Wealth of Nations. In his work he explained why some countries were rich and others were not.

One of the explanations he gave was that of the accumulation of capital or wealth. In other words, if a nation saved and invested, little by little it would become richer. By having more and more machines (capital goods), more savings (financial capital) and more education (human capital), it would be able to produce more and better.

Marx's capital accumulation

Almost a century later the famous economist Karl Marx would give the concept a twist. In this case, Marx was running contrary to Smith. Marx claimed that inequality in the world and the exploitation of workers had to do with the accumulation of capital.

Karl Marx defined the accumulation of capital as the original or primitive accumulation of capital. According to his writings, he shaped the process preceding the capitalist system. Marx claimed that this accumulation was responsible for the separation of the means of production and direct producers.

According to Marx, the accumulation of capital was followed by:

• Bankruptcy of the peasants: They stopped owning farmland.
• Wealth concentration: All wealth was concentrated in a few.

Both Marx and Adam Smith are known for this concept. But, perhaps, the influence of Karl Marx has been greater during the last century.

Different perspectives

Throughout history the concept has evolved. And, along with the concept, the different thoughts and theories about it. The history of economic thought divides two positions regarding this fact:

• Liberal economists: They think it is the engine of economic growth. Saving and investment are key elements in the development of countries. As long as it is kept at optimal levels, it is one of the keys to the advancement of society. They do not believe that there is a concentration of capital.
• Anti-capitalist economists: They think that the accumulation of wealth only produces inequality and poverty. The capital must be invested but in favor of all. They believe in the concentration of capital.

Between these two radical and opposite positions there are many middle points. Many authors and economists who have collected his thinking about it. Each one, yes, with nuances that make it peculiar.