purplecthulhu

Some thoughts inspired by purpletigron's journal, concerning capital and terms that use it rather inconsistantly...

Human capital - essentially the money invested in your staff through recruitment and training

Intellectual capital - as far as I can tell, this refers to the intellectual property that a company or nation 'owns', be that patent rights, copyrights, licenses etc.

If you go with these terms of capital in a literal sense, then we would have some quite different ways in which companies would behave.

Training is often seen to be a negative factor. Staff spend time away from the workplace learning things, and might then become skilled enough to get a better job somewhere else. If invenstment in staff was seen as of equal or greater value as investment in hardware - the traditional meaning of capital expenditure - and treated on the balance sheet as capital, then a different attitude might arise. Losing staff through redundancy would be like selling off buildings, not losing a liability. Retention of staff would be like keeping buildings adequately maintained, and retraining and updating skills would work similarly.

Intellectual capital is something currently treated as a great asset. Indeed, some companies like ARM Holdings Ltd., make all their money from it, since they have no production capacity of their own. And yet intellectual capital, or intellectual property (IP) as it is usually known, has the tendency to run away from you. Look at the music and movie companies, trying desperately to protect their exclusive distribution rights and bending whole societies out of shape in the process. What we see here are the first steps towards an economy of plenty, where the things you attach value to are easily and identicially copiable for very little cost. If nanotechnology is ever workable, then this will apply to almnost everything. Standing in the way of this tide is like being Canute. IP will decay much more readily in the future, and short term gain from it, which is the basis of RIAA and ARM's business models, aren't going to work for much longer. A 'value added' process is needed. So, for example, we get a different and more involving movie experience in a cinema than in the home, which is why movie studios, despite the MPAA's protestations, are doing pretty well. And when you are dealing with something that is essentially transitory, which is inherent to music and film publishing, you need to put some decent investment into new material. This is something that RIAA has been very poor on of late. Maybe RIAA needs to head towards virtual concert halls, rather than fighting back the tide of Napsterisation. ARM, meanwhile, should fight against the traditional hostility towards manufacturing in the UK, and actually set up some production capacity of their own.