Economic institutions and the reproduction of capital

Domagoj Racic (JJ Strossmayer University of Osijek)

Abstract

The reproduction of capitalism as a socio-economic system entails production and utilisation of various forms of capital - including financial, physical, human, organisational and social capital. Although all forms of capital have economic value, they display different patterns of development, utilisation and exchange. The main difference is between the appropriable forms of capital that can be owned, traded and thus disembedded from their social context, and those that are predominantly relational and context-dependent, which implies that utilisation is primarily enabled by access opportunities rather than ownership rights. The reproduction of the forms of capital occurs in the context of economic institutions, among which property rights, contracts, firms, markets, and the forms of strategic alliances are particularly analysed. Rather than being purely instrumental, economic institutions are pervaded by the duality between rights and obligations or constraints. Consequently, sustainable reproduction and enhancement of various forms of capital depend upon the social context which defines the content of institutionalised rights and obligations, as well as the means of conflict resolution. Although this claim particularly pertains to the relational forms of capital, it is also applicable to the appropriable forms as well – especially given the shift towards post-industrial society. By providing conducive social relations, institutions can facilitate the ongoing balancing process between production and utilisation of various forms of capital by a particular firm, as well as by the society as a whole.

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