Jiva Technology

The different types of capital and why they’re important.

When we think of capital in an economic sense, we think of money, investment or wealth; the stuff that starts companies and oil the wheels of finance around the world. We think of venture capital, risk capital; we think of financial capital. It took me a long time to realise that there are other types of capital. Or more accurately, since I’m not from what Australians aptly call, “the big end of town”, it took me a long time to realise what financial capital was and a whole lot longer than that to discover the other types of capital: social capital and intellectual capital.

Capital works to earn money so that you don’t have to, but of course allocating that capital does require some effort, particularly if you want it back with a decent return. You can learn this at some point if you study economics, probably around the age of 17 or 18 if you don’t come from the sort of family where its in the air you breath. Schools also major on the importance of intellectual capital. They don’t call it that, they call it being bright or high potential. If you have intellectual capital, you are more likely to go to a good university and get on in life. If you have financial capital and intellectual capital, you’re probably in a really good place.

But what happens if you have zero financial capital and average intellectual capital? Presumably, all is lost. Well, no, not exactly, because what schools don’t teach you explicitly is the importance of the third type of capital: your individual social capital. ¬†How good are you at building social networks? Can you work with people? Do you have a high degree of emotional intelligence? The point is that there are many ways to become successful and many combinations of capital that can help you through life, but we do a poor job of helping students understand this. Exams are important, but we all intuitively know that its not the only way forward.

Hard work and good social intelligence can be as powerful as coming from a wealthy family or being born with brains if you recognise what you have and how to use it. Some might consider this a ‘school of life’ approach, but I’d prefer to think of it as more a function of self-awareness than experience. If we’re going to get the best out of everyone, we have to signpost different routes to success as a society, otherwise we risk consigning too many to the scrapheap before they’ve started, which doesn’t work for anyone.


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