Capital Productivity is using less Capital to produce the same amount of goods and services. The Finance Industry distributes Capital but it is remarkably inefficient as it uses at least twice as much Capital as needed to produce most goods and services.
Modern societies use Capital to make labour, and physical assets more productive. Unfortunately, the good work done by Capital is undermined by Capital itself as the Financial Industry is increasingly unproductive. We now have overpriced energy, housing, water, telecommunications, infrastructure, and food, because of unproductive Capital. In today’s world Capital sits still too long and allows rentiers to receive an income without doing anything. We can address the problem by bringing competition to Capital distribution.
When we produce something to sell, there is a cost of production and a cost of Capital. We pay for goods that include these costs in the price. With normal Capital where the return on Capital is more money, the seller receives money to cover the costs of production and Capital and retains all the Capital. We can increase the Productivity of Capital if the seller shares the retained Capital with the buyer.
The sharing idea is a common business practice such as frequent flyer points, shopper dockets, everyday rewards, discounts for repeat sales, two for the price of one, subscription schemes and various other marketing schemes. Businesses do it because it increases the productivity of their Capital as they get repeat sales, and it locks in their customers so it reduces the cost of sales.
A community can increase Capital productivity further by sharing the Capital retained between the seller and the buyer and using it for products with repeat sales. The method increases productivity by reducing the amount of Capital needed to produce and sell repeat goods and services and by helping prevent Capital from being tied up in unproductive assets. The increased productivity increases sellers' profits and reduces the buyers' costs.
Splitting the Capital between seller and buyer saves other costs as it removes the need and cost of Capital Markets to distribute Capital. Consumers acquire a small amount of Capital with each sale, which also reduces some of the need for government taxes to redistribute wealth. It also circulates Capital locally and spreads the benefits throughout society. Localising Capital also reduces the length of supply lines with further productivity improvements.
Increasing the local productivity of Capital means we have more Capital to improve productivity which, in turn, increases the overall productivity of an economy.
Community Capital is one way to share Capital and increase productivity to benefit all those in a local community.
