The mystery of capital

Dead capital exists because we have already forgotten that converting a physical asset to generate capital requires a very complex process.

Why assets can be made to produce abundant capital in the West but very little in the rest of the world is a mystery.

In medieval Latin, "capital" appears to have denoted head of cattle or other livestock, which have always been important sources of wealth beyond the basic meat they provide.

The term "capital" does two jobs simultaneously: capture the physical dimension of assets (livestock) and their potential to generate surplus value (mike, hides, meat, fuel and reproduction) 

Modern definition: part of a country's assets that initiates surplus production and increases productivity.

For accumulated assets to become active capital and put additional production in motion, they must be fixed and realized in some particular subject which lasts or some time at least after that labor is past.

Capital is not the accumulated stock of assets but the potential it holds to deploy new production. Creating capital also requires a conversion process.

Capital is first an abstract concept and must be given a fixed, tangible form to be useful.

The additional value people obtain from the resources is not a value of the resources themselves, but rather a value of the man-made process entrinsic to the resources.

Bringing capital to life requires us to go beyond looking at our assets as they are to actively thinking about them as they could be.

What creates capital in the West is an implicit process buried in the intricates of its formal property systems.---The formal property system

Any asset whose economic and social aspects are not fixed in a formal property system is extremely hard to move in the market.

The formal property systems produce six effects that allow citizens to generate capital.
(1) fixing the economic potential of assets
property is not the stuff itself but an economic concept about the stuff, embodied in a legal representation 

(2) integrate dispersed information into one system
The integration of all property systems under one formal property law shifted the legitimacy of the rights of owners from the politized context of local communities to the impersonal context law.

(3) make people accountable
Freed from primitive econ activities and burdensome parochial constraints, citizens could explore how to generate surplus value from their own assets. People lose anonymity in the system.

Formal property's role in protecting not only ownership but the security of transactions encourages citizens in advanced countries to respect titles, honor contracts, and obey the law. 

(4) make assets fungible