Circulating capital is a term used by classical economists such as Adam Smith, David Ricardo and Karl Marx. It refers to physical capital and operating expenses, i.e., short-lived items that are used in production and used up in the process of creating other goods or services. This is roughly equal to Intermediate consumption. It includes raw materials, intermediate goods, inventories, ancillary operating expenses and (working capital). It is con...
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Circulating capital is a term used by classical economists such as Adam Smith, David Ricardo and Karl Marx. It refers to physical capital and operating expenses, i.e., short-lived items that are used in production and used up in the process of creating other goods or services. This is roughly equal to Intermediate consumption. It includes raw materials, intermediate goods, inventories, ancillary operating expenses and (working capital). It is contrasted with fixed capital.
Therefore, circulating capital is a component of the technical capital that participates in and is used up in a single cycle of production. It always needs replacing at every cycle (raw materials, basic and intermediate materials, combustible, energy…). In accounting, the circulating capital comes under the heading of circulating actives.
Karl Marx pointed out in the second volume of Das Kapital that the distinction between fixed and circulating capital assets is only relative - the two types of capital differ only...
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