{"id":18166,"date":"2020-11-15T20:33:00","date_gmt":"2020-11-16T00:33:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=18166"},"modified":"2020-11-22T22:06:37","modified_gmt":"2020-11-23T02:06:37","slug":"financial-capital","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/financial-capital\/","title":{"rendered":"Financial Capital: Why Tech Revolutions Need It"},"content":{"rendered":"\n<p>What is financial capital in technological revolutions? How does it help propel industrial revolutions and why do new technologies need it?<\/p>\n\n\n\n<p>Financial capital in technological revolutions actually refers to the agents that make the revolution possible, not money. In this case, it is the condition that allows wealth to be redistributed. <\/p>\n\n\n\n<p>Read more about financial capital in technological revolutions. <\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Financial Capital vs Production Capital<\/strong><\/h2>\n\n\n\n<p>In <em>Technological Revolutions<\/em>, when Carlota Perez uses the term \u201ccapital,\u201d she refers not to the actual capital (money), but rather to the <em>agents<\/em> and their motives in wealth creation.<\/p>\n\n\n\n<p><strong>Financial capital <\/strong>represents the agents who possess wealth in the form of money or relatively liquid assets. Their objective is to make money from money, and they perform actions that are most likely to increase their wealth. It reallocates and redistributes wealth.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.shortform.com\/blog\/production-capital\/\">Production capital<\/a> <\/strong>represents the agents who generate new wealth by producing goods or services. These agents do this with borrowed money from financial capital and share the generated wealth. Their desire is to accumulate greater profit-making capacity by innovating, growing, and expanding.&nbsp;<\/p>\n\n\n\n<p>As we\u2019ll see, both types of capital have critical roles to play in the arc of each revolution.<\/p>\n\n\n\n<p> Financial capital and production capital are different by nature:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Mobile by nature, while production capital is tied to concrete products.&nbsp;<\/li><li>Can invest in a firm without much knowledge of what it does. For production capital, knowledge about product and markets is the very foundation of success.<\/li><li>Is footloose by nature and will flee danger, while production capital has to face every storm or perish.<\/li><li>Ironically, as a revolution matures, incumbent production capital can become conservative and unreceptive to innovation. In this stage, it is the role of this capital to enable the rise of new entrepreneurs.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Phase 3: Synergy<\/strong><\/h3>\n\n\n\n<p>Using the infrastructure developed in Frenzy and the regulatory safeguards in Turning Point, <strong><a href=\"https:\/\/www.shortform.com\/blog\/technological-revolutions\/\">the technological revolution<\/a> diffuses across the whole economy<\/strong>. A \u201cgood feeling\u201d sets in with increasing coherence. Business is satisfied about its positive social role. Technology, and even finance, is seen as a positive force.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is financial capital in technological revolutions? How does it help propel industrial revolutions and why do new technologies need it? Financial capital in technological revolutions actually refers to the agents that make the revolution possible, not money. In this case, it is the condition that allows wealth to be redistributed. Read more about financial capital in technological revolutions.<\/p>\n","protected":false},"author":5,"featured_media":18186,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,81],"tags":[152],"class_list":["post-18166","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-economics","tag-technological-revolutions","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Financial Capital: Why Tech Revolutions Need It - Shortform Books<\/title>\n<meta name=\"description\" content=\"Why do technological revolutions need financial capital? In order to create wealth and change, new tech needs financial capital. 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Here&#039;s why.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/financial-capital\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2020-11-16T00:33:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-11-23T02:06:37+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/financial-capital-technological-revolutions-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1920\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Carrie Cabral\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Carrie Cabral\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/\"},\"author\":{\"name\":\"Carrie Cabral\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/2ababb7c63a94ff5d2190f71dc417d56\"},\"headline\":\"Financial Capital: Why Tech Revolutions Need It\",\"datePublished\":\"2020-11-16T00:33:00+00:00\",\"dateModified\":\"2020-11-23T02:06:37+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/\"},\"wordCount\":350,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/financial-capital-technological-revolutions-scaled.jpg\",\"keywords\":[\"Technological Revolutions\"],\"articleSection\":[\"Business\",\"Economics\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/financial-capital\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/\",\"name\":\"Financial Capital: Why Tech Revolutions Need It - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/financial-capital\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/11\/financial-capital-technological-revolutions-scaled.jpg\",\"datePublished\":\"2020-11-16T00:33:00+00:00\",\"dateModified\":\"2020-11-23T02:06:37+00:00\",\"description\":\"Why do technological revolutions need financial capital? 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