Capital is money or resources used for production rather than consumption.
When a farmer pauses his work to create a tool to make future labor easier, that tool is a form of capital. Indeed…
Tools were the only form of capital before the advent of money. And tool-creation is still the main use for monetary capital today. In other words…
Capitalism is TOOLISM.
- We delay gratification (forgo immediate consumption) in order to save money to invest in tools (shovels, drill presses, tractors, assembly lines, robots, computers, etc.)
- The new tools allow for expanded or more efficient production
- Increased production allows for more consumption through increased profits, higher wages, and a decreased cost of living
If you have a savings account or any kind of investments, then you’re a capitalist. It’s really that simple — capitalism is a savings account or investment portfolio that’s used to fund tool creation.