Capital Production | Consumer & Capital Goods

#capitalism #capital #economics

There are various types of capital. For this article, we will talk about consumer and capital goods. The goal of all production is to make things that satisfy our demands. That is, transforming capital goods into something else that can be consumed immediately, or they can be called consumer goods. This may sound simple, but the process is rather time consuming and complex. For example, a steak in Texas may have a short production process—farm, butcher, to consumer. However, a cup of coffee in New York City is likely quite a bit longer—coffee field in Brazil, roasters, grinders, shipping liners, to consumer. I understand this is not the exact process. There are many more factors that are in play here, this is just an example.

In each scenario, the meat and coffee producer, took a roundabout process to transform the capital goods into consumer goods. This is a very long process, and it was done for you, the paying customer. Be grateful, they are doing this for you. All factors are put in the correct place, so to speak, to complete the circle. The finished good can be used to satisfy our demand for steak and coffee. Steak ready to eat and coffee ready to drink don’t exist in nature. Therefore, we must use this roundabout process to satisfy demands. This is a combination of human labor and nature.

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