What Is Capital Accumulation?

The accumulation of capital refers simply to the gathering or amassment of objects of value; the increase in wealth; or the creation of wealth. Capital can be generally defined as assets invested for profit or consumption.
In economics, accounting and Marxian economics, capital accumulation is often equated with investment, especially in real capital goods. The concentration and centralisation of capital are two of the results of such accumulation.
But capital accumulation can refer variously to:
• working and consuming less than earned--saving or accumulating the residual
• relying on the effects of compound interest to increase initial capital
• real investment in tangible means of production.
• financial investment in assets represented on paper
• investment in non-productive physical assets such as residential real estate that appreciate in value
consuming less than produced by productive assets like farm land--saving or accumulating the residual
• "human capital accumulation," i.e., new education and training increasing the skills of the (potential) labour force.
Non-financial and financial capital accumulation is usually needed for economic growth, since additional production usually needs additional money to enlarge the scale of production. Smarter and more productive organization of production can also increase production without increased capital. Capital can be created without increased investment by inventions or improved organization that increase productivity, discoveries of assets --oil, gold, minerals, etc., sale of property, etc.

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