Capital in Canada

In economics, capital traditionally refers to the wealth owned or employed by an individual or a business. This wealth can exist in the form of money or property. Definitions of capital are constantly evolving, however. For example, in some contexts it is synonymous with equity. Social capital can refer to positive outcomes of interactions between people or to the effective functioning of groups. Human capital refers to people’s experience, skills and education, viewed as an economic resource.


In the 18th century, Scottish philosopher Adam Smith wrote about capital in its traditional sense. He distinguished capital from other assets such as a home or luxury goods. Smith defined capital as wealth that can create additional income, such as machinery and equipment.

Capital — which is the root word of capitalism — has had positive connotations throughout much of history. In modern times, however, people have strongly disagreed about the degree to which the profits of capital should be shared between owners and workers. This debate has caused many political conflicts throughout recent history.

Capitalism has had notable critics, ranging from German philosopher Karl Marx in the 1860s (see Marxism) to French economist Thomas Piketty in the 2010s. British economist John Maynard Keynes has also greatly influenced how people think about capital. Writing in the 1930s, Keynes criticized the aspect of capitalism that allows people to live off interest income. He believed that people who earned wealth this way did not contribute productively to the economy. Over time, Keynes’ theories influenced governments to drive down real interest rates for individual investors to near zero after taxes and inflation. (See also Keynesian Economics.)

During the 2019 Canadian federal election campaign, the New Democratic Party leader, Jagmeet Singh, proposed a 1 per cent “super wealth tax” on assets of more than $20 million. Such a tax would, in large part, have functioned as a tax on capital.

See also Capital Formation.

Help students and educators this school year!

The Canadian Encyclopedia is a project of Historica Canada, a non-profit, nonpartisan organization devoted to teaching Canadians more about our shared country. Last school year, over 13 million people used The Canadian Encyclopedia as a trusted resource. Nearly 5 million of those users were students and teachers. Please donate today to help even more Canadians access free, impartial, fact-checked, regularly updated information about Canada’s history and culture in both official languages. All donations above $3 will receive a tax receipt.