---
entity_slug: encroachment_upon_capital
entity_type: Process
vsm_system: S3
type_rationale: Encroachment upon capital is described as "the process by which individuals
  who spend beyond their income consume their capital stock," indicating it is an
  activity or transformation that occurs over time rather than something that exists
  independently.
vsm_rationale: This process involves the misallocation of capital resources away from
  productive employment toward unproductive consumption, which is fundamentally a
  management-level decision about resource allocation and operational control of capital.
classified_at: '2026-02-23T11:04:27.945094'
---

# Classification: Encroachment Upon Capital

## Entity Type

Process

## VSM System

S3

## Type Rationale

Encroachment upon capital is described as "the process by which individuals who spend beyond their income consume their capital stock," indicating it is an activity or transformation that occurs over time rather than something that exists independently.

## VSM Rationale

This process involves the misallocation of capital resources away from productive employment toward unproductive consumption, which is fundamentally a management-level decision about resource allocation and operational control of capital.
