The accumulation of capital refers to the accumulation of capital goods , financial capital and human capital.One of the first economists who referred 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 the accumulation of capital or wealth. That is, if a nation saved and invested, it would gradually be 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 turn the concept around. 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 an 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.
- Concentration of wealth: All wealth was concentrated in a few.
Both Marx and Adam Smith are known about this concept. But, perhaps, the influence of Karl Marx has been greater during the last century.
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 parts of the development of countries. As long as it remains at optimal levels, it is one of the keys to the advancement of society. They do not believe that there is concentration of capital.
- Anti-capitalist economists: They think that the accumulation of wealth only produces inequality and poverty. Capital must be invested but in everyone’s favor. They believe in the concentration of capital.
Between these two radical and opposite positions many middle points are included. Many authors and economists who have collected their thoughts about it. Each one, yes, with nuances that make it peculiar.