<!-- generated: provider=openrouter model=arcee-ai/trinity-large-preview:free date=2026-02-19 source=book-2-chapter-05 -->

# Manufacturing Capital

# Manufacturing Capital

## Definition

Capital employed in transforming rude produce into manufactured goods through the application of labour, machinery, and technical processes. Manufacturing capital includes both fixed capital (machinery, tools, buildings) and circulating capital (raw materials, wages) used in production processes.

## Source Chapter

Book II, Chapter 5

## Context

Smith identifies manufacturing capital as the second most productive form of capital employment, emphasizing that it puts into motion more productive labour than trade but less than agriculture. He notes that manufacturing capital must be concentrated in specific locations where production processes can be efficiently organized.

## Economic Domain

Production

---
