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Individual capital

Individual capital refers to inalienable or personal traits of persons, tied to their bodies and available only through their own free will, such as skill[?], creativity, enterprise, courage, capacity for moral example, non-communicable wisdom, invention or empathy[?], non-transferable personal trust and leadership.

It was recognized as an intangible quality of persons in economics back to at least Adam Smith. He distincted it (as "enterprise") from labour (economics) which can be coerced and is usually seen as strictly imitative (learned or transmitted, via such means as apprenticeship).

Human development theory sees labour as the yield of individual capital in the same way that macro-economics sees financial capital as the yield of the looser idea of human capital. But the rest problem[?] and social welfare function selection, as well as the subjective factors in behavioral finance, has led to a closer analysis of factors of production. In effect, the financial architecture[?] is no longer trusted as an arbiter of the value of life as it was in neoclassical economics. Money is not seen as values-neutral[?], but as embodying a set of larger social choices about money supply rules, made by measuring well-being of whole populations.

In other theories that pay less attention to these issues, the phrase firm-specific human capital may be used, which clearly includes individual capital, but includes at least also some "firm-specific" social capital (community trust) and instructional capital (sharable knowledge or skills). This is easy to measure: its yield is your salary in your current job.

To the degree this is consistent if you take other work nearby, this opens the questions of what is not "firm-specific" and whether a nation is just a bigger "firm": Some analyses see political capital, or just "influence" or "trust of professionals" as a full style of capital of its own. Some ethicists, most clearly Jane Jacobs, see this as simple corruption. Nonetheless, corruption clearly has a cash value, involves some creativity to arrange, and is a decision factor. It is a skill like any other.

Perhaps because of this, not all theorists recognize individual capital as being as essential as labour, or distinct from social or political influence, or from instructional capacity. These theorists often refer to "intellectual capital", which more properly describes a debate or locus of complexity that arises when individuals take key instructional roles. Some refer to celebrity as another fusion, when individuals take key social roles.

Those who differentiate individual capital tend to see it as something that one can invest in, directly, and see grow, directly. For individual skill, even skill at a highly imitative enterprise, like sports or mastery of a musical instrument, this is very often quite measurable. Many enterprises, for instance, a music conservatory[?] or circus school[?] or creative writing[?] coach, are clearly making a living on the identification and (somewhat) measurable enhancement of the individual.

Marxist economics tends to dismiss all this as simply "more labour". A problem with that analysis is that it simply cannot explain the substitution problem and lack of demand that occurs when, for instance, an understudy takes on a leading role, or a second author takes over writing a popular book series. At the very least there must be some conditional, if not firm-specific then "class specific", special ability to command premiums for outstanding personal performance.

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