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Exclusive Trade Monopoly
Fixed capital is the capital stock that gets invested in long-term upgrades to production processes. Fixed capital includes machines, buildings, land improvement, and even education.
Fixed Capital Quotes in The Wealth of Nations
The The Wealth of Nations quotes below are all either spoken by Fixed Capital or refer to Fixed Capital. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Book 2, Chapter 1 Quotes
Every fixed capital is both originally derived from, and requires to be continually supported by, a circulating capital. All useful machines and instruments of trade are originally derived from a circulating capital, which furnishes the materials of which they are made, and the maintenance of the workmen who make them. They require, too, a capital of the same kind to keep them in constant repair.
No fixed capital can yield any revenue but by means of a circulating capital. The most useful machines and instruments of trade will produce nothing, without the circulating capital, which affords the materials they are employed upon, and the maintenance of the workmen who employ them. Land, however improved, will yield no revenue without a circulating capital, which maintains the labourers who cultivate and collect its produce.
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The relationship between fixed and circulating capital is key to understanding how investment generates economic growth. Specifically, Smith defines production in terms of the process of combining fixed and circulating capital. The most common version of this is using machinery (fixed capital) to turn raw materials (circulating capital) into a finished product. After covering wages, rent, and the ordinary rate of profit, the remaining revenue from any business goes to capital. A portion must be reserved to maintain existing fixed capital and replace the circulating capital that was used up in the production process. For instance, a pin factory must Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollitia eaque ipsa. Perf
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Fixed Capital Term Timeline in The Wealth of Nations
The timeline below shows where the term Fixed Capital appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 2, Chapter 1
...capital, or capital used to produce or obtain goods that are sold for profit, and fixed capital , or capital used to improve production processes by buying machines, improving land, and so...
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Like an individual’s stock, a society’s stock is also made of three parts: circulating capital, fixed capital , and a reserve for immediate consumption. This reserve includes food, clothes, furniture, and owner-occupied...
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...they either go to replenish the stock reserved for consumption, or they get invested into fixed capital . In turn, this fixed capital only produces revenue when combined with circulating capital—for instance,...
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Book 2, Chapter 2
...people can actually spend on consumption, is the gross revenue minus the expense of maintaining fixed capital and replacing circulating capital. Fixed capital is designed to make workers more productive, but keeping...
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...new provisions, raw materials, and unsold products to replace those that have been turned into fixed capital or the reserve for consumption—is different. The circulating capital that turned into fixed capital is...
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...the money supply (or the coins in circulation) is similar to the cost of maintaining fixed capital , as they both enable the rest of the economy to function. Thus, the cost...
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...operate, as this will never produce adequate returns in the moderate term. Lending merchants their fixed capital would produce even slower returns for banks. If merchants want long-term credit, they should seek...
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Book 2, Chapter 5
Manufacturers use their capital to buy the instruments ( fixed capital ) and materials (circulating capital) that they need to make their products, as well as...
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Book 4, Chapter 2
...fail, these manufacturers sell off their circulating capital, but they lose the value of their fixed capital . But the slower taxes fall, the less fixed capital they lose.
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