Difference between capital and wealth Capital is a part of wealth which is used for the production of further wealth. Thus, “All wealth is not capital, Though all capital is wealth”.

Professor Benham and Fisher do not find any difference between wealth and capital because both are used for production and consumption. According to these scholars, all wealth is capital because the direct effect of goods is on production of wealth. The only difference lies in use if for example. A car is bought for excursions and enjoyment. It is not capital but if it is bought for doing business it is capital.

Importance of capital is production in the modern large scale production system. Capital is a very important factor of production, so important that other factors of production manpower resources of a country cannot be utilised without capital nor can the natural resources be exploited for the use of man.

Capital has been a very important factor of production even in the earlier stage of human development in the haunting stage man used some implements to kill wild animals for food. These implements were his capital. Since then capital in some form or the other has played a significant role in the economic development of society. Under capitalism capital is most significant it is equally important under communism. Though capital is not a primary factor of production. Yet its importance is as great as that of any primary factor of production such as land or labour.