Let’s spend a moment deconstructing the word “capitalism.” Note it contains the word Capital. So far so good. Obviously the key concept here is capital.
So what is “capital”? It turns out there are multiple kinds of capital. The most familiar kinds are tangible: cash, orchards, factories, water rights, tools, and so on.
Then there’s credit. If you have unlimited credit at very low rates of interest, you can buy all the tangible capital you want, as long as it produces enough income to cover the costs of production and the interest you owe on the borrowed money you used to buy the factories, orchards, etc.
Some types of capital are intangible but essential to the productive use of tangible capital. You can have the credit, land and pile of lumber needed to build a house, but if you don’t have the knowledge, experience and skills needed to turn the pile of wood into a productive form of tangible capital, you have nothing but an unproductive pile of lumber.
We call this form of capital human capital (also called knowledge-based capital, intellectual capital, etc.).
If you hire a person with some of these skills, that’s a good start, but you need specialists who can complete all the trades needed to build a fully functional house that can be rented or sold, i.e. earn a return on the capital invested.
If the person you hire knows a lot of other trustworthy tradespeople, that’s what we call social capital.
If we dig deeper, we find even more forms of capital.