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Capital (disambiguation)

Capital (disambiguation)

Capital is a word with many potential meanings:
- A capital city (in many states the political, religious, and economic capital are the same):
- In geography and politics, a capital (also called capital city or political capital) of a country or other political entity is a city or town that contains the government. (An alternative, less formal definition of "political capital" is the still-unclaimed favors a politician or lobbyist other political entity is owed in return for favors he or she or it has in the past done. For example, a factory seeking permits to expand might "call in" the political capital it has built up by years of donating to school-construction projects.)
- In societies with official religions a capital is a religious capital.
- In finance and economics, capital is real or financial wealth, and Capital formation is the increase in wealth.
- In literature and economics, Capital is the English title of Das Kapital by Karl Marx.
- In Marxian economics, capital is asset value seeking surplus-value (or value-accretion) within a framework of private property relations and social relations of production which permit the economic exploitation of surplus labour.
- The Five Capitals Model of sustainable development groups together: Natural capital, Manufactured capital, Financial capital with the sociological social capital and Human capital (see immediately below). The model is used to show stocks and flows of resources as they relate to a sustainable society, healthy environment, and productive economy.
- Social capital, cultural capital, and human capital are sociological terms.
- In architecture, the capital of a pillar or column is its top part.
- In orthography, a capital is another term for an upper case letter or majuscule.
- Capital is a French-language magazine.
- Capital punishment refers to death sentence. Also, the term "capital" is often confused with the term capitol, which is the term used for certain buildings used to house the legislative body of a certain sovereignty. simple:Capital

Geography

)]] Geography is the study of the locational and spatial variation of both natural and human phenomena on Earth. The word derives from the Greek words Ge (γη) or Gaea (γεια), both meaning "Earth", and graphein (γραφειν) meaning "to describe" and "to write". Modern geography is a diverse discipline that draws influence from almost every other arena of knowledge. Geographers engage with other disciplines according to their particular research interests and, while subjects such as biology and economics have a powerful influence, there are geographers who use concepts taken from subjects such as sociology, psychology and sports science, among many others. Within the discipline there have been many long-running tensions among those seeking to define geography - whether as a 'science' or as a 'humanity', as a 'systematic' subject or 'regional' specialism and so forth - which at various times have come close to destroying geography as an academic discipline. Whilst profound differences do exist among geographers, the dual concepts of space and place provide a commonality of interest, which gives the subject a unique identity.

Structure of geography

William Hughes - who taught the geography of the Holy Lands to divinity students at King's College London - defined geography in an address in 1863: :"Mere place names are not geography. To know by heart a whole gazeteer full of them would not, in itself, constitute anyone a geographer. Geography has higher aims than this: it seeks to classify phenomena (alike of the natural and of the political world insofar as it treats of the latter) to compare, to generalise, to ascend from effects to causes and in doing so to trace out the great laws of nature and to mark their influence upon man. In a word, geography is a science, a thing not of mere names, but of argument and reason, of cause and effect." This was a specific rejection of geography as a merely descriptive discipline and also defined it as inclusive of both the physical world and the human. Within the discipline, however, there are many areas of specialism. Modern geographers tend to specialise in one of the broad branches (or sub-branches). However, most introductory geography syllabuses seek to ensure that geographers have at least working knowledge of the main focus of each branch of the subject.

Physical geography

Physical geography (or physiogeography) focuses on geography as an Earth science. It aims to understand the physical layout of the Earth, its weather and global flora and fauna patterns. Many areas of physical geography make use of geology, particularly in the study of weathering and sediment movement. Physical Geography can be divided into the following broad categories:
- Geomorphology
- Hydrology
- Glaciology
- Biogeography
- Climatology
- Pedology (soil study)
- Coastal/Marine studies
- Geodesy
- Palaeogeography
- Environmental Geography and management
- Landscape ecology Exact lines between these different areas are often difficult to draw. Sometimes Oceanography is included as a branch within physical geography, but is now considered a separate subject in its own right. Related topics: Atmosphere - Archipelago - Continent - Desert - Island - Landform - Ocean - Sea - River - Lake - Ecology - Soil - Timeline of geography, paleontology - Geostatistics - Environmental science - Oceanography - Environmental studies

Human geography

Human geography is a branch of geography that focuses on the study of patterns and processes that shape human interaction with various environments. It encompasses human, political, cultural, social, and economic aspects. While the major focus of human geography is not the physical landscape of the Earth (see Physical geography) it is hardly possible to discuss human geography without referring to the physical landscape on which human activities are being played out, and environmental geography is emerging as a link between the two. Human geography can be divided into broad categories, such as:
- Economic geography
- Development geography
- Population geography or Demography
-
- Urban geography
- Social geography
- Behavioral geography
- Cultural geography
- Political geography, including Geopolitics
-
- Historical geography
- Regional science
- Strategic geography
- Military geography
- Feminist geography
- Distinction between these fields of study have become increasingly blurred over time and the above list should not be considered definitive. Related topics: Countries of the world - Country - Nation - State - Personal union - Province - County - City - Municipality - Central place theory - Urban morphology

Socio-environmental geography

During the time of environmental determinism, geography was defined not as the study of spatial relationships, but as the study of how humans and the natural environment interact. Though environmental determinism has died out, there remains a strong tradition of geographers addressing the relationships between people and nature. There are two main subfields of socio-environmental geography:
- cultural and political ecology (CAPE) and
- risk-hazards research.

Cultural and political ecology

Cultural ecology grew out of the work of Carl Sauer in geography and a similar school of thought in anthropology. It examined how human societies adapt themselves to the natural environment. Sustainability science has been one important outgrowth of this tradition. Political ecology arose when some geographers used aspects of critical geography to look at relations of power and how they affect people's use of the environment. For example, an influential study by Michael Watts argued that famines in the Sahel are caused by the changes in the region's political and economic system as a result of colonialism and the spread of capitalism.

Risk-hazards research

Research on hazards began with the work of geographer Gilbert F. White, who sought to understand why people live in disaster-prone floodplains. Since then, the hazards field has expanded to become a multidisciplinary field examining both natural hazards (such as earthquakes) and technological hazards (such as nuclear reactor meltdowns). Geographers studying hazards are interested in both the dynamics of the hazard event and how people and societies deal with it.

Historical geography

This branch seeks to determine how cultural features of the multifarious societies across the planet evolved and came into being. Study of the landscape is one of many key foci in this field - much can be deduced about earlier societies from their impact on their local environment and surroundings. ; What's in a name? Historical geography and the Berkeley School "Historical Geography" can indeed refer to the reciprocal effects of geography and history on each other. But in the United States, it has a more specialized meaning: This is the name given by Carl Ortwin Sauer of the University of California, Berkeley to his program of reorganizing cultural geography (some say all geography) along regional lines, beginning in the first decades of the 20th Century. To Sauer, a landscape and the cultures in it could only be understood if all of its influences through history were taken into account: Physical, cultural, economic, political, environmental. Sauer stressed regional specialization as the only means of gaining expertise on regions of the world. Sauer's philosophy was the principal shaper of American geographic thought in the mid-20th century. Regional specialists remain in academic geography departments to this day. But many geographers feel that it harmed the discipline in the long run: Too much effort was spent on data collection and classification, and too little on analysis and explanation. Studies became more and more area specific as later geographers struggled to find places to make names for themselves. This probably led in turn to the 1950s crisis in Geography which nearly destroyed it as an academic discipline.

History of geography

:See main article: History of geography History of geography The Greeks are the first known culture to actively explore geography as a science and philosophy. Mapping by the Romans as they explored new lands added new techniques. During the Middle Ages, Arabs such as Idrisi, Ibn Batutta, and Ibn Khaldun maintained the Greek and Roman techniques and developed new ones. Following the journeys of Marco Polo, interest in geography spread throughout Europe. The great voyages of exploration in 16th and 17th centuries revived a desire for both accurate geographic detail, and more solid theoretical foundations. This period is also known as Great Geographical Discoveries. By the 18th century, geography had become recognized as a discrete discipline and became part of a typical university curriculum in Europe (especially Paris and Berlin). Over the past two centuries the quantity of knowledge and the number of tools has exploded. There are strong links between geography and the sciences of geology and botany, as well as economics, sociology and demographics. In the West during the 20th century, the discipline of geography went through four major phases: environmental determinism, regional geography, the quantitative revolution, and critical geography.
Geographic techniques
As spatial interrelationships are key to this synoptic science, maps are a key tool. Classical cartography has been joined by a more modern approach to geographical analysis, computer-based geographic information systems (GIS).
- Cartography studies the representation of the Earth's surface with abstract symbols (map making). Although other subdisciplines of geography rely on maps for presenting their analyses, the actual making of maps is abstract enough to be regarded separately. Cartography has grown from a collection of drafting techniques into an actual science. Cartographers must learn cognitive psychology and ergonomics to understand which symbols convey information about the Earth most effectively, and behavioral psychology to induce the readers of their maps to act on the information. They must learn geodesy and fairly advanced mathematics to understand how the shape of the Earth affects the distortion of map symbols projected onto a flat surface for viewing. It can be said, without much controversy, that cartography is the seed from which the larger field of Geography grew. Most geographers will cite a childhood fascination with maps as an early sign they would end up in the field. mathematics
- Geographic Information Systems deals with the storage of information about the Earth for automatic retrieval by a computer, in an accurate manner appropriate to the information's purpose. In addition to all of the other subdisciplines of geography, GIS specialists must understand computer science and database systems. GIS has so revolutionized the field of cartography that nearly all mapmaking is now done with the assistance of some form of GIS software.
- Geographic quantitative methods deal with numerical methods peculiar to (or at least most commonly found in) geography. In addition to spatial analyses, you are likely to find things like cluster analysis, discriminant analysis, and non-parametric statistical tests in geographic studies.
- Geographic qualitative methods, or ethnographic research techniques, are used by human geographers. In cultural geography there is a tradition of employing qualitative research techniques also used in anthropology and sociology. Participant Observation and in-depth interviews provide human geographers with qualitative data. In their study geographers use four interrelated approaches:
- Systematic - Groups geographical knowledge into categories that can be explored globally
- Regional - Examines systematic relationships between categories for a specific region or location on the planet.
- Descriptive - Simply specifies the locations of features and populations.
- Analytical - Asks why we find features and populations in a specific geographic area.
Related fields

Urban and regional planning
Urban planning and regional planning use the science of geography to assist in determining how to develop (or not develop) the land to meet particular criteria, such as safety, beauty, economic opportunities, the preservation of the built or natural heritage, etcetera. The planning of towns, cities and rural areas may be seen as applied geography although it also draws heavily upon the arts, the sciences and lessons of history. Some of the issues facing planning are considered briefly under the headings of rural exodus, urban exodus and Smart Growth.
Regional science
In the 1950s the regional science movement arose, led by Walter Isard to provide a more quantitative and analytical base to geographical questions, in contrast to the more qualitative tendencies of traditional geography programs. Regional Science comprises the body of knowledge in which the spatial dimension plays a fundamental role, such as regional economics, resource management, location theory, urban and regional planning, transport and communication, human geography, population distribution, landscape ecology, and environmental quality.
Reference

See also

- List of geography topics
- Geographical terms
- List of countries
- Geography reference tables
- Map
- Geographical renaming
- Geographic magazines
- National Geographic Society (United States)
- National Geographic Bee (United States)
- Point of Beginning
- Royal Geographical Society (United Kingdom)
External links

- [http://www.confluence.org/ Confluence.org - A work in progress, involving travelling to every point on the globe where the lines of longitude and latitude intersect and taking a photograph in each direction.]
- [http://www.aag.org/ Association of American Geographers]
- [http://www.gisuser.com/ GISuser.com, information-rich portal about GIS]
- [http://www.populationdata.net/ PopulationData.net]
- [http://www.freemaps.de/ Free Maps Germany]
- [http://www.ericdigests.org/1996-4/high.htm Using Literature To Teach Geography in High Schools. ERIC Digest.]
- [http://ericdigests.org/1992-5/geography.htm Teaching Geography at School and Home. ERIC Digest.]
- [http://ericdigests.org/1996-1/geography.htm The National Geography Content Standards. ERIC Digest.]
- [http://www.geo-guide.de Geo-Guide] extensive list of academic resources on geography and earth science
- [http://www.geopium.org Geopium: Geopolitics of Illicit Drugs in Asia]
- [http://www.nationalgeographic.com/ National Geographic Online]
- [http://www.rgs.org Royal Geographical Society]
- [http://www.rcgs.org Royal Canadian Geographical Society]
- [http://www.canadiangeographic.ca Canadian Geographic]
- [http://hypergeo.free.fr Hypergeo : Geographical Encyclopedia]
- [http://www.rare-maps.com/links.cfm Antique and Rare Maps - Art Source International] - Links to rare and antique maps and to cartography resources.
- [http://www.mapinfo.com/ MapInfo GIS Software]
- Category:School subjects als:Geografie ko:지리학 ms:Geografi ja:地理学 simple:Geography th:ภูมิศาสตร์

Politics

Politics is the process by which decisions are made for a given society. The method of making decisions for groups varies, but the act of decision making is the key component that characterises politics. Although it is generally applied to governments, politics is also observed in all human group interactions, including corporate, academic, and religious institutions. Political science is the study of political behavior and examines the acquisition and application of power, i.e. the ability to impose one's will on another. One theorist, Harold Lasswell, has defined politics as "who gets what, when, and how." Another definition of 'politics' is: "how power is distributed within a group or system".

A natural state

In 1651, Thomas Hobbes published his most famous work, Leviathan, in which he proposed a model of early human development to justify the creation of human associations. Hobbes described an ideal state of nature wherein every person had equal right to every resource in nature and was free to use any means to acquire those resources. He noted that such an arrangement created a “war of all against all” (bellum omnium contra omnes). Further, he noted that men would enter into a social contract and would give up absolute rights for certain protections. While it appears that social cooperation and dominance hierarchies predate human societies, Hobbes’s model illustrates a rationale for the creation of societies (polities).

Early history

V.G. Childe describes the transformation of human society that took place around 6000 BCE as an urban revolution. Among the features of this new type of civilization were the institutionalization of social stratification, non-agricultural specialised crafts (including priests and lawyers), taxation, and writing. All of which require clusters of densely populated settlements - city-states. The word "Politics" is derived from the Greek word for city-state, "Polis". Corporate, religious, academic and every other polity, especially those constrained by limited resources, contain dominance hierarchy and therefore politics. Politics is most often studied in relation to the administration of governments. The oldest form of government was tribal organization. Rule by elders was supplanted by monarchy, and a system of Feudalism as an arrangement where a single family dominated the political affairs of a community. Monarchies have existed in one form or another for the past 5000 years of human history.

Definitions

- Power is the ability to impose one's will on another. It implies a capacity for force, i.e violence.
- Authority is the power to enforce laws, to exact obedience, to command, to determine, or to judge.
- Legitimacy is an attribute of government gained through the acquisition and application of power in accordance with recognized or accepted standards or principles.
- A government is the body that has the authority to make and enforce rules or laws.

Political power

Samuel Gompers’ often paraphrased maxim,"Reward your friends and punish your enemies," hints at two of the five types of power recognized by social psychologists: incentive power (the power to reward) and coercive power (the power to punish). Arguably the other three grow out of these two. Legitimate power, the power of the policeman or the referee, is the power given to an individual by a recognized authority to enforce standards of behavior. Legitimate power is similar to coercive power in that unacceptable behavior is punished by fine or penalty. Referent power is bestowed upon individuals by virtue of accomplishment or attitude. Fulfillment of the desire to feel similar to a celebrity or a hero is the reward for obedience. Expert power springs from education or experience. Following the lead of an experienced coach is often rewarded with success. Expert power is conditional to the circumstances. A brain surgeon is no help when your pipes are leaking.

Authority and legitimacy

Max Weber identified three sources of legitimacy for authority known as (tripartite classification of authority). He proposed three reasons why people followed the orders of those who gave them:

Traditional

Traditional authorities receive loyalty because they continue and support the preservation of existing values, the status quo. Traditional authority has the longest history. Patriarchal (and more rarely Matriarchal) societies gave rise to hereditary monarchies where authority was given to descendants of previous leaders. Followers submit to this authority because "we've always done it that way." Examples of traditional authoritarians include kings and queens.

Charismatic

Charismatic authority grows out of the personal charm or the strength of an individual personality (see cult of personality for the most extreme version). Charismatic regimes are often short lived, seldom outliving the charismatic figure that leads them. Examples include Hitler, Napoleon, and Mao.

Legal-rational

Legal-Rational authorities receive their ability to compel behavior by virtue of the office that they hold. It is the authority that demands obedience to the office rather than the office holder. Modern democracies are examples of legal-rational regimes.

References

GOMPERS,SAMUEL; “Men of Labor! Be Up and Doing,” editorial, American Federationist, May 1906, p. 319

Capital

:This article concerns places that serve as centers of government and politics. For alternative meanings see capital (disambiguation) In politics, a capital (also called capital city or political capital — although the latter phrase has an alternative meaning based on an alternative meaning of "capital") is the principal city or town associated with its government. It is almost always the city which physically encompasses the offices and meeting places of the seat of government and fixed by law. The word capital is derived from the Latin caput meaning "head," and the related term capitol refers to the building where government-business is chiefly conducted. Seats of government in major substate jurisdictions are usually called "capitals", but at lower administrative subdivisions, terms such as county town, county seat, or borough seat are also used. As the focal point of power for the country or region, the capital naturally attracts the politically motivated and those whose skills are needed for efficient administration of government such as lawyers, journalists, and public policy researchers. Older capitals have often developed into prime economic, cultural, or intellectual centers as well. Such is certainly the case with Paris and Buenos Aires among national capitals, and Irkutsk or Salt Lake City in their respective state or province. Such concentration may be controversial. The siting of Brasília in Brazil's heartland was done in order to bring progress to the interior of the country, since the old capital, Rio de Janeiro, along with entire Southeastern Brazil was already crowded. The government of South Korea announced in 2004 it would move its capital from Seoul to Yeongi-Gongju — even though the word Seoul itself means "capital" in the Korean language. The convergence of political and economic or cultural power is by no means universal. Traditional capitals may be economically eclipsed by provincial rivals, as occurred with Thebes by Alexandria, Nanjing by Shanghai, or Edinburgh by Glasgow. The decline of a dynasty or culture could mean the extinction of its capital city as well, as occurred with Babylon and Cahokia. And many modern capital cities, such as Abuja and Ottawa, were deliberately fixed outside existing economic areas, and may not have established themselves as new commercial or industrial hubs since.

Multiple capitals

:See also: List of multiple capitals A number of cases exist where states or other entities have multiple capitals. In South Africa, for example, the administrative capital is Pretoria, the legislative capital is Cape Town, and the judicial capital is Bloemfontein, the outcome of the compromise that created the Union of South Africa in 1910. In others, the "effective" and "official" capital may differ for pragmatic reasons, resulting in a situation where a city known as "the capital" is not, in fact, host to the seat of government:
- Yamoussoukro was designated the national capital of Côte d'Ivoire in 1983, but as of 2004 most government offices and embassies were still located in Abidjan
- Sucre is still the constitutional capital of Bolivia, but most of the national government long abandoned that region for La Paz
- Amsterdam is the nominal national capital of the Netherlands even though the Dutch government and supreme court are both located in The Hague. In such cases, the city housing the administrative capital is usually understood to be the "national capital" among outsiders. For instance, Santiago is understood to be the capital of Chile even though its Congress is in Valparaiso.

Capital as symbol

With the rise of modern empires and the nation-state, the capital city has become a symbol for the state and its government, and imbued with political meaning. Unlike medieval capitals, which were declared wherever a monarch held his or her court, the selection, relocation, founding, or capture of a modern capital city is an emotional affair. For example:
- Ruined and almost uninhabited Athens was made capital of newly independent Greece with the romantic notion of reviving the glory of the ancients;
- Peter I of Russia moved his government to Saint Petersburg to give the Russian Empire a western orientation, while Kemal Atatürk did the same by ironically moving east to Ankara, away from Ottoman Istanbul;
- The selection or founding of a "neutral" city, one unencumbered by regional or political identity, represented the unity of a new state with Madrid in Spain, Washington, D.C. in the United States, and Canberra in Australia among others;
- During the American Civil War, tremendous resources were expended to defend Washington, D.C. from Confederate attack even though the small federal government could have been moved relatively easily in the era of railroads and telegraph.
- Berlin has risen from the ashes of World War II (Stunde Null) to become the new/old capital city of the third most prosperous nation in the World, Germany.

The effects of the capital

The capital city is almost always the main target in a war, as capturing it usually guarantees capture of much of the enemy government, and victory for the attacking forces. In the tradition of drama, capital cities are usually associated with high stake final battles, such as in the Lord of the Rings series where the forces of Mordor besiege the Gondorian capital of Minas Tirith; it is assumed if the city falls, Gondor falls with it. In old China, the relatively fragile dynasties could easily be toppled with the fall of their capital. In the Three Kingdoms period, both Shu and Wu fell when their respective capitals of Cheng Du and Jian Ye fell. The Ming were destroyed when the Manchus took their seat of power, and this pattern endlessly repeats itself in Chinese history. In the West, things were vastly different. The Byzantine Empire lasted for nearly 60 years after Crusaders took their capital city of Constantinople. The American revolutionaries lost their capital of Philadelphia, but survived the blow.

Largest national capital cities

Some of the largest cities in the world are not national capitals. The largest national capitals on each continent, by urban/metropolitan area population, are:
- Africa: Cairo (11,146,000)
- Asia: Tokyo (35,237,000)
- Europe: Moscow (13,600,000)
- North America: Mexico City (17,809,471)
- Oceania: Wellington (367,600)
- South America: Buenos Aires (13,349,000)

Lists of capitals

- Lists of national capitals
- by name
- by country (with also the largest city)
- by continent and country
- List of historical national capitals
- List of capitals of subnational entities
- List of multiple capitals
- List of countries that have the name of their capital included in their name
- List of countries whose capital is not their largest city Category:Capitals Category:Political geography als:Hauptstadt ko:수도 ja:首都 ms:Ibu negara simple:Capital (city) th:เมืองหลวง zh-min-nan:Siú-to·

City

:For alternate meanings see city (disambiguation) A city is an urban area that is differentiated from a town, village, or hamlet by size, population density, importance, or legal status.

Introduction

In most parts of the world, cities are generally substantial and nearly always have an urban core, but in the United States many incorporated areas which have a very modest population, or a suburban or even mostly rural character, are designated as cities. City can also be a synonym for "downtown" or a "city centre". A city usually consists of residential, industrial and business areas together with administrative functions which may relate to a wider geographical area. A large share of a city's area is primarily taken up by housing, which is then supported by infrastructure such roads, streets and often public transport routes such as a subway or a metro rail system. Lakes and rivers may be the only undeveloped areas within the city. The study of cities is covered extensively in human geography. "The city is a human habitat that allows people to form relations with others at various levels of intimacy while remaining entirely anonymous." (This definition was the subject of an exhibition at the Israeli pavilion at the 2000 Venice Biennale of architecture)

The difference between towns and cities

The difference between towns and cities is differently understood in different parts of the English speaking world. There is no one standard international definition of a city: the term may be used either for a town possessing city status; for an urban locality exceeding an arbitrary population size; for a town dominating other towns with particular regional economic or administrative significance. Although city can refer to an agglomeration including suburban and satellite areas, the term is not appropriate for a conurbation (cluster) of distinct urban places, nor for a wider metropolitan area including more than one city, each acting as a focus for parts of the area. In the United Kingdom, a city is a town which has been known as a city since time immemorial, or which has received city status by royal charter — which is normally granted on the basis of size, importance or royal connection (traditional pointers have been whether the town has a cathedral or a university). Some cathedral cities, for example St. David's in Wales, are quite small, and may not be known as cities in common parlance. (See the City status in the United Kingdom.) A similar system existed in the medieval Low Countries where a landlord would grant settlements certain privileges (city rights) that settlements without city rights didn't have. This include the privilege to put up city walls, hold markets or set up a judicial court. In Australia and New Zealand, city is used to refer both to units of local government, and as a synonym for urban area. For instance the [http://www.southperth.wa.gov.au City of South Perth] is part of the urban area known as Perth, commonly described as a city. On the other hand, Gisborne in New Zealand is known as the first city to see the sun, despite being administered by a district council, not a city council. An interesting phenomenon in American English is the generalisation of the term city to all settlements. Britons may be bemused by forms with fields headed, not Town and Postal code, but City and ZIP, even though the person needing to fill it in could be living in a city, a town without city status, or even a village or hamlet. In turn, many Americans often talk of "City Halls" when referring to town halls in quite small European towns and villages. Strangely, even though Americans are well aware that "village" means something smaller than a town, the word has often been co-opted by enterprising developers to make their projects sound welcoming and friendly. The result are so-called villages with 20 and 30-story high-rises, like Westwood Village in Los Angeles.

Geography

Westwood Village, of around 1550. The city is completely surrounded by a city wall and defensive canal. The square shape is inspired by Jerusalem.]] The geographies of cities, both physical and human, are diverse. Often cities will either be coastal and have a harbour or be situated near a river giving economic advantage. Water transports on rivers and oceans were (and in most cases still are) cheaper and more efficient than road transport over long distances. Older European cities often have historically intact central areas where the streets are jumbled together, seemingly without a structural plan. This quality is a legacy of earlier unplanned or organic development, and is often perceived by today's tourists to be picturesque. Modern city planning has seen many different schemes for how a city should look. The most commonly seen pattern is the grid, almost a rule in parts of the United States, and used for thousands of years in China. Derry was the first ever planned city in Ireland, begun in 1613, with the walls being completed 5 years later in 1618. The central diamond within a walled city with four gates was thought to be a good design for defence. The grid pattern chosen was subsequently much copied in the colonies of British North America [http://worldfacts.us/UK-Londonderry.htm]. However, the grid has been used for a long time in history. The Greeks gave their colonies around the Mediterranian often with a grid. One of the best examples around is the city of Priene. This city even had it's different districts. Much like modern city planning today. Also in de Medival times we see a preference for lineair planning. Good examples are the cities establish in the south of France by various rulers. And city expantions in old Dutch and Flanders cities. Other forms may include a radial structure in which main roads converge on a central point, often the effect of successive growth over long time with concentric traces of town walls and citadels - recently supplemented by ring-roads that take traffic around the edge of a town. Many Dutch cities are structured that way: a central square surrounded by a concentric canals. Every city expansion would imply a new circle (canals + town walls). In cities like Amsterdam and Haarlem this pattern is still clearly visible.

History of cities

Towns and cities have a long history, although opinions vary on whether any particular ancient settlement can be considered to be a city. The first true towns are sometimes considered to be large settlements where the inhabitants were no longer simply farmers of the surrounding area, but began to take on specialized occupations, and where to trade, food storage and power was centralized. Societies that live in cities are often called civilizations. By this definition, the first towns we know of were located in Mesopotamia, such as Ur, and along the Nile, the Indus Valley Civilization and China. Before this time it was rare for settlements to reach significant size, although there were exceptions such as Jericho, Çatalhöyük and Mehrgarh. The growth of ancient and medieval empires led to ever greater capital cities and seats of provincial administration, with ancient Rome, its eastern successor Constantinople and successive Chinese and later Indian capitals approaching or exceeding the half-million population level. It is estimated that ancient Rome population exceeded one million people by the end of the last century BCE, which is considered the only city to reach that number until the Industrial Revolution, however, Alexandria population was close to one million at the same time. Similar large administrative, commercial, industrial and ceremonial centres emerged in other areas, though on a smaller scale. During the European Middle Ages, a town was as much a political entity as a collection of houses. City residence brought freedom from customary rural obligations to lord and community: "Stadtluft macht frei" ("City air makes you free") was a saying in Germany. In Continental Europe cities with a legislature of their own wasn't unheard of, the laws for towns as a rule other than for the countryside, the lord of a town often being another than for surrounding land. In the Holy Roman Empire (i.e. medieval Germany and Italy) some cities had no other lord than the emperor. In exceptional cases like Venice, Genoa or Lübeck, cities themselves became powerful states, sometimes taking surrounding areas under their control or establishing extensive maritime empires. Similar phenomena existed elsewhere, as in the case of Sakai, which enjoyed a considerable autonomy in late medieval Japan. Most towns remained far smaller places, so that in 1500 only some two dozen places in the world contained more than 100,000 inhabitants: as late as 1700 there were fewer than forty, a figure which would rise thereafter to 300 in 1900. A small city of the early modern period might contain as few as 10,000 inhabitants, a town far fewer still. While the city-states, or poleis, of the Mediterranean and Baltic Sea languished from the 16th century, Europe's larger capitals benefited from the growth of commerce following the emergence of an Atlantic economy fuelled by the silver of Peru. By the 18th century, London and Paris rivalled the well-developed regionally-traditional capital cities of Baghdad, Beijing, Istanbul, Kyoto and Venice. The growth of modern industry from the late 18th century onward led to massive urbanization and the rise of new great cities, first in Europe and then in other regions, as new opportunities brought huge numbers of migrants from rural communities into urban areas. In the Great Depression of the 1930s cities were hard hit by unemployment, especially those with a base in heavy industry. Today the world's population is about half urban, with millions still streaming annually into the growing cities of Asia, Africa and Latin America.

Modern conceptions

Traditional approach

A universal linear approach to cities has been in place and accepted for a long time. As this approach falls short of explaining a number of aspects of city life, such as the diversity between cities, new ways have been sought. Influenced by post-structuralist thinking a new approach was born: using spatial thinking it is possible to not only fill the gaps, but indeed replace the old completely. Three characteristics have been identified as defining a city: the number of people to area (density), the networks of the city, as well as a particular way of life. None of these characteristics alone is enough to make a place a city. Until recently cities were almost exclusively viewed as part of a single, linear line of development. Starting with the Greek city-state, this linear approach placed each city somewhere, and it was believed that it was only a matter of time until the next stage along the prescript path of advancement was reached. For each stage an exemplar was identified. Step by step from Athens onwards to Venice and London, Los Angeles seemed to be the ultimate stage of a postmodern city. Such an approach regarded a city as a single static entity, which could be studied disconnected in time and space. This leads to a theoretical framework with little connection to real cities, but these were simply seen as less clear examples. In spite of apparent shortcomings, this approach is still very commonplace in respected and popular publications.

Shortcomings

Despite its wide acceptance this traditional approach to cities had serious shortcomings. Firstly, leaving the latest stage aside, it was completely eurocentric. It was believed that every city in the world could be compared with a past stage in the history of one European city. Secondly, there was no real explanation when and how changes occurred, how another stage in the line of development was achieved. There seemed no need to follow the changes of one city, but instead attention was turned to another exemplar. Thirdly, the disconnected view of cities is problematic. It implies that history, culture and connections of a place do not influence a place, which is questionable. Some thinkers argue that a history ignoring connections is necessary incomplete. Fourthly, the traditional approach failed to define what makes a city. It is unclear why one place is regarded as a city while another one is not. Lewis Mumford argued in 1937 for a social dimension, describing cities as geographical plexuses. Finally, viewing cities as a single body misses modern conceptions that there is more than one story to a place. The city of an aristocrat will surely differ from that of a slave. This also reflects a shift away from one single history of the powerful élites (often referred to as city élites) to a multidimensional perception of history. The notion of city rhythms has been introduced to highlight the different aspects of city life... The term city can be used to mean either an area of contiguous urbanization or a particular municipality (an [http://www.demographia.com/db-world-muni.htm area within the political borders of an incorporated municipality]). There is a substantial variation in municipalities around the world. The largest municipality, Chongqing, is approximately the same size as the state of Indiana and contains much more rural territory than continuous urbanization. In most cases, however, the continuous urbanization popularly thought of as the city extends well beyond the boundaries of the core incorporated city.

Modern approach

As a modern approach to cities, urban thinking analyzes various issues that arise in urban areas. It focuses largely upon connections and internal divisions which helps create a better understanding of the dynamics of cities. Using such spatial thinking, it is possible to understand various aspects for which the traditional approach did not provide an adequate explanation. One important aspect of spatial thinking is looking at the connections of a city. Such connections allow one to understand the unique character of a place. Rather than treating all cities the same, places are seen as interconnected through networks of culture, economics, trade or history. So while London and Tokyo are economically linked through stock markets, Graz and Stockholm are linked via the Cultural Capital of Europe. These networks overlap and are concentrated in cities. Arguably this concentration of networks creates a unique feeling of a place. Such networks, however, do not only link cities with cities, but also a city to its surroundings. The notion of a city footprint reflects the idea that a city on its own is not sustainable: it depends on produce from its surroundings, it needs trade links and other connections for economic viability. Looking at networks, it becomes possible to explain the rise and fall of cities. This has to do with the changing importance of connections and is maybe best illustrated with the arrival of Spanish colonizers in America. Within a short time, connections to Madrid became more important than connections to the former centre Tenochtitlán. The concentration of networks in cities can be used as an explanation of urbanization. It is the access to certain networks that attracts people. As various networks spatially run together in a confined area, people gather in cities. At the same time, this concentration of people means the introduction of new networks, such as social links, increasing the creation of new possibilities within cities. Urban social movements are a direct result of this possibility of making new connections. It is this openness to new connections that makes cities both attractive and to a certain degree unpredictable. Another important aspect of modern urban thinking is looking at the divisions within a city. This internal differentiation is linked to the external connections of a city. As places of meeting histories, cities are hybrid and heterogeneous. Hybrid they are as the connections which link places are bilateral, involving giving and taking in both directions. Heterogeneous they are because of the dynamism of cities. New encounters are ongoing processes where social relations and differences are constantly negotiated and shaped, reflecting the unequal power involved. Neither the internal differentiations nor the connections and networks of a place on their own define a city. Internal divisions are caused by external links, while at the same time connections to the outside open up the possibility of new social divisions. Divisions and connections in every city are intertwined, and only by considering both aspects of spatial thinking the complexity of cities is approachable. Immigration illustrates this interconnection of external networks and internal divisions well. The networks concentrated in the core of the city attract immigrants. As they immigrate, the newcomers bring along their histories, bringing new networks or enforcing existing ones. At the same time, their history offers opportunities to identify with or likewise exclude. Division and connection come hand in hand. Rather than attempting to eradicate such tensions and contradictions in the theoretical framework, modern urban thinking – influenced by poststructuralist thought – accounts for both sides. Static universal bodies are replaced by multidimensional networks, allowing for fluidity and dynamism.

Global cities

A global city, also known as a world city, is a prominent centre of trade, banking, finance, innovations, and markets. The term "global city", as opposed to megacity, was coined by Saskia Sassen in a seminal 1991 work. Whereas "megacity" refers to any city of enormous size, a global city is one of enormous power or influence. Global cities, according to Sassen, have more in common with each other than with other cities in their host nations. Bangkok, Beijing, Brussels, Chicago, Hong Kong, Johannesburg, London, Moscow, Mumbai, New York, Los Angeles, Paris, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tokyo, and Toronto are commonly referred to as global cities, however, the term is also applied to other cities. The notion of global cities regards the power of cities as contained within cities. The city is seen as a container where skills and resources are concentrated. The more successful city is able to concentrate more of these skills and resources. This makes the city itself more powerful in terms that it can influence what is happening around the world. Following this view of cities, it is possible to rank the world's cities hierarchically (John Friedmann and Goetz Wolff, "World City Formation: An Agenda for Research and Action," International Journal of Urban and Regional Research 6, no. 3 (1982): 319.). Critics of the notion point out to the different realms of power. The term global city narrowly focuses on economics. Cities like Rome are powerful in religious terms. Additionally, it has been questioned whether the city itself can be regarded as an actor. In 1995 Kanter argued that successful cities can be identified by three elements. To be successful, a city needs to have good thinkers (concepts), good makers (competence) or good traders (connections). The interplay of these three elements, Kanter argued, means that good cities are not planned but managed.

Environmental effects

Modern cities are known for creating their own microclimates. This is due to the large clustering of hard surfaces that heat up in sunlight and that channel rainwater into underground ducts. As a result, city weather is often windier and cloudier than the weather in the surrounding countryside. Conversely, because these effects make cities warmer (urban heat shield or urban heat islands) than the surrounding area, tornadoes tend to go around cities. Additionally towns can cause significant downstream weather effects. Garbage and sewage are two major problems for cities, as is air pollution coming from internal combustion engines (see public transport). The impact of cities on places elsewhere, be it hinterlands or places far away, is considered in the notion of city footprinting (ecological footprint).

Inner city

Main article: Inner city In the United States, United Kingdom and Republic of Ireland, the term "inner city" is sometimes used with the connotation of being an area, perhaps a ghetto, where people are less educated and wealthy and where there is more crime. These connotations are less common in other Western countries, as deprived areas are located in varying parts of other Western cities. In fact, with the gentrification of some formerly run-down central city areas the reverse connotation can apply - in Australia the term "outer suburban" applied to a person implies a lack of sophistication. For instance, in Paris the inner city is the richest part of the metropolitan area, where housing is the most expensive, and where elites and high-income individuals dwell. The United States, in particular, suffers from a culture of anti-urbanism that some say dates back as far as Thomas Jefferson who wrote that "The mobs of great cities add just so much to the support of pure government as sores do to the strength of the human body." On the businessmen who brought manufacturing industry into cities and hence increased the population density necessary to supply the workforce, he wrote "the manufactures of the great cities... have begotten a depravity of morals, a dependence and corruption, which renders them an undesirable accession to a country whose morals are sound." Modern anti-urban attitudes are to be found in America in the form of a planning profession that continues to develop land on a low-density suburban basis, where access to amenities, work and shopping is provided almost exclusively by car rather than on foot. However, there is a growing movement in North America called "New Urbanism" that calls for a return to traditional city planning methods where mixed-use zoning allows people to walk from one type of land-use to another. The idea is that housing, shopping, office space, and leisure facilities are all provided within walking distance of each other, thus reducing the demand for road-space and also improving the efficiency and effectiveness of mass transit.

References

- Toynbee, Arnold (ed), Cities of Destiny, New York: McGraw-Hill, 1967. Pan historical/geographical essays, many images. Starts with "Athens", ends with "The Coming World City-Ecumenopolis".

External links

- [http://www.populationdata.net/palmaresvilles.html All 1M+ major urban areas]
- [http://www.p.lodz.pl/I35/personal/jw37/EUROPE/europe.html Place Names of Europe]
- [http://www.tageo.com/index.htm Place Names of the world - Index of 2M cities]
- [http://www.nationmaster.com/graph-T/geo_lar_cit&int=-1&b_ac=1 Most populous city of each country]
- [http://www.world-gazetteer.com/st/statb.htm For all countries, number of cities per size category]
- [http://www.nationmaster.com/graph-T/geo_lar_cit_pop_cap&int=-1 For each country, part of its population that lives in its most populous city] (with some odd figures due to the comparison of data of different years)
- [http://www.nlc.org/nlc_org/site/ The National League of Cities] (United States)
- [http://www.innercitypress.org Inner City Press] (Weekly publication on cities, United States)
- [http://etext.lib.virginia.edu/cgi-local/DHI/dhi.cgi?id=dv1-52 Dictionary of the History of ideas:] The City
- [http://www.morganquitno.com/cit05list.htm Morgan Quinto's 11th Annual America's Safest (and Most Dangerous) Cities]
- [http://www.skyscraperpage.com A friendly website designed by skyscraper enthusiasts featuring diagrams and descriptions of the buildings of cities around the world.]
- [http://www.bifurcaciones.cl bifurcaciones.cl, urban cultural studies journal]
- [http://worldheritage-forum.net/de/ Worldheritage-Forum] Weblog and Informationen on UNESCO World Heritage topics (with focus on cities) Category:Urban studies and planning Category:Cities ja:都市 ja:市 nb:By simple:city th:เมือง

Government

A government is the body that has the power to make and enforce laws within an organization or group. In its broadest sense, "to govern" means to administer or supervise, whether over an area of land, a set group of people, or a collection of assets. The word government is derived the Greek Κυβερνήτης (kubernites), which means "steersman", "governor", "pilot" or "rudder".

Definitions

One approach is to define government as the decision-making arm of the state, and define the latter on the basis of the control it has over violence and the use of force within its territory. Specifically, the state (and by extension the government) has been considered by some to be the entity that holds a monopoly on the legitimate use of force within a territory. This view has been taken by the political economist Max Weber and subsequent political philosophers. The exact meaning of it depends on what is understood by “legitimate”. If we use the term in an ethical sense, then this definition would suggest that an organisation might be considered a state by its supporters but not by its detractors. An alternative definition is to take "legitimate" violence to be simply that which has active or tacit acceptance by the vast majority of the population. In this view, the presence of insurrection or civil war against an entity would jeopardise its claim to be a state, provided the insurrection enjoyed significant popular support. Similarly, an entity that shared military or police power with independent militias and bandits could be considered to have a monopoly on “legitimate” violence but to be failing to enforce it, reducing its claim to statehood. In practice, such situations are often described as "failed states". Government can also be defined as the political means of creating and enforcing laws; typically via a bureaucratic hierarchy. Under this definition, a purely despotic organization which controls a territory without defining laws would not be considered a government. Another alternative is to define a government as an organisation that attempts to maintain control of a territory, where "control" involves activities such as collecting taxes, controlling entry and exit to the state, preventing encroachment of territory by neighbouring states and preventing the establishment of alternative governments within the country. In Commonwealth English, the word "Government" can also be used to refer only to the executive branch, in this context being a synonym for the word "administration" in American English (e.g. the Blair Government, the Bush Administration). In countries using the Westminster system, the Government (or party in Government) will also usually control the legislature. The French use of the word gouvernement covers both meanings, whereas Canadian French generally uses it to mean the executive branch. The German word Regierung refers only to government as the executive branch; the wider meaning of the word, government as a system, can be translated as Staatsgewalt.

Forms of government

Various forms of government have been implemented. A government in a developed state is likely to have various sub-organisations known as offices, departments, or agencies, which are headed by politically appointed officials, often called ministers or secretaries. Ministers may in theory act as advisors to the head of state, but in practice have a certain amount of direct power in specific areas. In most modern democracies, the elected legislative assembly has the power to dismiss the government, but in those states that have a separate head of government and head of state, the head of state generally has great latitude in appointing a new one.

Theories

There are a wide range of theories about the reasons for establishing governments. The four major ones are briefly described below. Note that they do not always fully oppose each other - it is possible for a person to subscribe to a combination of ideas from two or more of these theories.

Greed and oppression

Many political philosophies that are opposed to the existence of a government (such as Anarchism, and to a lesser extent Marxism), as well as others, emphasize the historical roots of governments - the fact that governments, along with private property, originated from the authority of warlords and petty despots who took, by force, certain patches of land as their own (and began exercising authority over the people living on that land). Thus, it is argued that governments exist to enforce the will of the strong and oppress the weak.

Order and tradition

The various forms of conservatism, by contrast, generally see the government as a positive force that brings order out of chaos, establishes laws to end the "war of all against all", encourages moral virtue while punishing vice, and respects tradition. Sometimes, in this view, the government is seen as something ordained by a higher power, as in the divine right of kings, which human beings have a duty to obey.

Natural rights

Natural rights are the basis for the theory of government shared by most branches of liberalism (including libertarianism). In this view, human beings are born with certain natural rights, and governments are established strictly for the purpose of protecting those rights. What the natural rights actually are is a matter of dispute among liberals; indeed, each branch of liberalism has its own set of rights that it considers to be natural, and these rights are sometimes mutually exclusive with the rights supported by other liberals.

Social contract

One of the most influential theories of government in the past two hundred years has been the social contract, on which modern democracy and most forms of socialism are founded. The social contract theory holds that governments are created by the people in order to provide for collective needs (such as safety from crime) that cannot be properly satisfied using purely individual means. Governments thus exist for the purpose of serving the needs and wishes of the people, and their relationship with the people is clearly stipulated in a "social contract" (a constitution and a set of laws) which both the government and the people must abide by. If a majority is unhappy, it may change the social contract. If a minority is unhappy, it may persuade the majority to change the contract, or it may opt out of it by emigration or secession.

Operations

Governments concern themselves with regulating and administering many areas of human activity, such as trade, education, medicine, entertainment, and war.

Enforcement of power

Governments use a variety of methods to maintain the established order, such as police and military forces, (particularly under despotism, see also police state), making agreements with other states, and maintaining support within the state. Typical methods of maintaining support and legitimacy include providing the infrastructure for administration, justice, transport, communication, social welfare etc., claiming support from deities, providing benefits to elites, holding elections for important posts within the state, limiting the power of the state through laws and constitutions (see also Bill of Rights) and appealing to nationalism. Different political ideologies hold different ideas on what the government should or should not do.

Territory

The modern standard unit of territory is a country. In addition to the meaning used above, the word state can refer either to a government or to its territory. Within a territory, subnational entities may have local governments which do not have the full power of a national government (for example, they will generally lack the authority to declare war or carry out diplomatic negotiations).

Scale of government

Main articles: government ownership, government spending The scale to which government should exist and operate in the world is a matter of debate. Government spending in developed countries varies considerably but generally makes up between about 30% and 70% of their GDP.

Capital (religion)

For religious capitals, see:
- Vatican City, Rome: Roman Catholicism of Christianity
- Mecca, Saudi Arabia: Islam
- Jerusalem, Israel: Christianity, Islam, Judaism

Capital (economics)

Capital has a number of related meanings in economics, finance and accounting. In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business. Initially, it is assumed here that other styles of capital, e.g. physical capital, can be acquired with money or financial capital, so there is little need here for any further analysis of the latter. So below, the word "capital" is short-hand for "real capital" or "capital goods" or means of production. Also to be ignored will be the problems of aggregating capital and the capital controversy.

Capital in classical economic theory

In classical economics, capital is one of three factors of production, the others being land and labour. Goods with the following features are capital:
- It can be used in the production of other goods (this is what makes it a factor of production).
- It is human-made, in contrast to "land," which refers to naturally occurring resources such as geographical locations and minerals.
- It is not used up immediately in the process of production, unlike raw materials or intermediate goods. The third part of the definition was not always used by classical economists. The classical economist extraordinaire David Ricardo would use the above definition for the term fixed capital while including raw materials and intermediate products are part of his circulating capital. For him, both were kinds of capital. Karl Marx adds a distinction that is often confused with Ricardo's. In Marxian theory, variable capital refers to a capitalist's investment in labor-power, seen as the only source of surplus-value. It is called "variable" since the amount of value it can produce varies from the amount it consumes, ie, it creates new value. On the other hand, constant capital refers to investment in non-human factors of production, such as plant and machinery, which Marx takes to contribute only its own replacement value to the commodities it is used to produce. It is constant, in that the amount of value committed in the original investment, and the amount retrieved in the form of commodities produced, remains constant. Investment or capital accumulation in classical economic theory is the act of producing increased capital. In order to invest, goods must be produced which are not to be immediately consumed, but instead used to produce other goods as a means of production. Investment is closely related to saving, though it is not the same. As Keynes pointed out, saving involves not spending all of income on current goods or services, while investment refers to spending on a specific type of goods, i.e., capital goods. The Austrian economist Eugen von Böhm-Bawerk maintained that capital intensity was measured by the roundaboutness of production processes.

Broadening the definition of capital

Traditional economic theory generally viewed capital as physical items, such as tools, buildings and vehicles that are used in the production process. Other economists have focussed on broader forms of capital. For example, investment in skills and education can be viewed as building up human capital. Some theories use the terms intellectual capital or knowledge capital which lead to certain questions and controversies discussed in those articles. In general, intellectual capital is that which produces new " intellectual property rights", and that in turn is "whatever one can get paid royalties for". Further, one can create intellectual property rights simply by taking someone else's ideas and then patenting them. So intellectual capital need not be used. Classifications of capital that have been used in various economic theories include:
- Financial capital which represents obligations, and is liquidated as money for trade, and owned by legal entities.
- Natural capital which is inherent in ecologies and protected by communities to support life, e.g. a river which provides farms with water.
- Infrastructural capital is non-natural support systems (e.g. clothing, shelter, roads, PCs) that minimize need for new social trust, instruction, and natural resources. (Almost all of this is manufactured, leading to the older term manufactured capital, but some arises from interactions with natural capital, and so it makes more sense to describe it in terms of its appreciation/depreciation process, rather than its origin: much of natural capital grows back, infrastructural capital must be built and installed.)
- Human capital, arising from investment in skills and education. Human development theory recognizes it as being composed of clear and distinctive social, imitative and creative elements:
- Social capital is the value of trusting relationships between individuals in an economy.
- Individual capital which is inherent in persons, protected by societies, and trades labor for trust or money . Close parallel concepts are 'talent', 'ingenuity', 'leadership', 'trained bodies', or 'innate skills' that cannot reliably be reproduced by using any combination of any of the others above. In traditional economic analysis individual capital is more usually called labor. Although it is still possible to calculate the macro economic idea of "human capital" as payments (like salary), it is rarely or not used when discussing the process of planning investment: for this it is broken down into the more specific styles, which are distinct when one considers the means of identifying them, investing in, and exploiting them. The term "human capital" may thus do more harm than good. In part as a result, separate literatures have developed to describe both natural capital and social capital. Such terms reflect a wide consensus that nature and society both function in such a similar manner as traditional industrial infrastructural capital, that it is entirely appropriate to refer to them as different types of capital in themselves. In particular, they can be used in the production of other goods, are not used up immediately in the process of production, and can be enhanced (if not created) by human effort. There is also a literature of intellectual capital and intellectual property law. However, this increasingly distinguishes means of capital investment, and collection of potential rewards for patent, copyright (creative or individual capital), and trademark (social trust or social capital) instruments.

Capital formation

Capital formation is a term used in national accounts statistics and macroeconomics. It basically refers to the net additions to the capital stock, or, to the value of the increase of the capital stock; though it may occasionally also refer to the total stock of capital formed. In the USA, statistical estimates for capital formation were pioneered by Simon Kuznets in the 1930s and 1940s.

Wrong definition

According to one popular macro-economic definition, capital formation refers to "the transfer of savings from households and governments to the business sector, resulting in increased output and economic expansion". This definition is wrong on two counts. Firstly, many larger corporations engage in corporate self-financing, i.e. financing from their own reserves, or through loans from (or share issues bought by) other corporations. In other words, this definition ignores that the largest source of investment capital consists of financial institutions, not individuals or households or governments. Admittedly, financial institutions are, in the last instance, mostly owned by individuals, but those individuals have little control over this transfer of funds, nor do they accomplish the transfer themselves. Few individuals can say they "own" a corporation, anymore than individuals "own" the public sector. Secondly, the transfer of funds to corporations may not result in increased output or economic expansion at all; given excess capacity, a low rate of return and/or lacklustre demand, corporations may not invest those funds to expand output, and engage in asset speculation instead, to obtain property income that boosts shareholder returns. To illustrate, New Zealand's Finance Minister Michael Cullen stated (NZ Herald, 24 February 2005) that "My sense is that there are definite gains to be made, both economic and social, in increasing the savings level of New Zealanders and in encouraging diversification in assets away from the residential property market." This idea is based on a wrong understanding of capital formation, ignoring the real issue - which is that the flow of mortgage repayments by households to financial institutions is not being used to expand output and employment on a scale that could repay escalating private sector debts.

Types of capital formation

Economists often use "capital formation" synonymously with Gross fixed capital formation (GFCF) but strictly speaking this is incorrect, because capital formation may include assets which are not fixed capital assets, for example, financial assets. In modern econometrics, attempts are sometimes also made to estimate the formation of human capital, and expenditure on research & development (R&D) may also be regarded as capital formation. Likewise, Goodwill may be regarded as a form of capitalisation.

Gross and net capital formation

Capital formation can be valued gross (without deductions for depreciation) or net (adjusted for depreciation write-offs).

Measurement issues

Capital formation is notoriously difficult to measure statistically, mainly because of the valuation problems involved in establishing the value of capital assets. Capital assets can for instance be valued at historic (acquisition) cost, current replacement cost, current sale value, average market value, or scrap value. A business owner may in fact not even know what his business is "worth" as a going concern, in terms of its current market value. The "book value" of a capital stock may differ greatly from its "market value", and another figure may apply for taxation purposes. The value of capital assets may also be overstated or understated using various legal constructions. During an accounting period, additions may be made to capital assets (including those which are of a type that disproportionately increase the value of the capital stock) and capital assets are also disposed of; at the same time, physical assets also incur depreciation or Consumption of fixed capital. Also, price inflation may affect the value of the capital stock. In national accounts, there is an additional problem, since the sales/purchases of one enterprise can be the investment of another enterprise. Therefore, to obtain a measure of the total net capital formation, a system of grossing and netting of capital flows is required. Without this, double counting would occur. Capital expenditure must be distinguished from intermediate expenditure and other operating expenditure.

Perpetual Inventory Method

A method often used in econometrics to estimate the value of the physical capital stock is the so-called Perpetual Inventory Method (PIM). Starting off from a benchmark stock value for capital held, and expressing all values in constant dollars using a price index, additions to the stock are added, and disposals as well as depreciation are subtracted year by year (or quarter by quarter). Thus, an historical data series is obtained for the growth of the capital stock over a period of time. In so doing, assumptions are made about the real rate of price inflation, realistic depreciation rates, average service lives of physical capital assets, and so on.

Example of capital estimates

In the 2005 Analytical Perspectives document, an annex to the US Budget (Table 12-4: National Wealth, p. 201), estimates are provided for the value of total tangible capital assets of the USA, which doubled since 1980 (stated in trillions of dollars, at September 30, 2003): Publicly owned physical assets: Structures and equipment . . . . . . $5.6 federally owned or financed . . . $2.2 Federally owned . . . . . . . . $1.0 Grants to state and local govt . $1.0 funded by state and local govt . . $3.3 Other federal assets . . . . . . . . $1.4 Subtotal (1). . . . . . . . . . . . . . . . . . . . . . . . $6.9 trillion Privately owned physical assets: Reproducible assets . . . . . . . . $28.7 Residential structures. . . . . . $12.4 Nonresidential plant & equipment $11.8 Inventories . . . . . . . . . . . $1.5 Consumer durables . . . . . . . . $3.1 Land . . . . . . . . . . . . . . . $10.2 Subtotal (2). . . . . . . . . . . . . . . . . . . . . . . . $38.9 trillion Education capital: federally financed . . . . . . . . . $1.4 financed from other sources . . . . $44.0 Subtotal (3) . . . . . . . . . . . . . . . . . . . . . . . $45.4 trillion Research and development capital: federally financed R&D . . . . . . . $1.1 R&D financed from other sources . . $1.7 Subtotal (4). . . . . . . . . . . . . . . . . . . . . . . . $2.9 trillion TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $94.1 trillion Net claims of foreigners on US . . . . . . . . . . $4.2 trillion Net wealth . . . . . . . . . . . . . . . . . . . . . . . . .$89.9 trillion (Note: this data obviously does not include financial assets, only "tangible" assets in US territory).

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