827 B
827 B
Trade Capital
Definition
Capital employed in the exchange and distribution of goods, including both wholesale and retail trade activities. Trade capital facilitates the movement of goods from producers to consumers, creating markets and enabling specialization by connecting areas of surplus with areas of demand.
Source Chapter
Book II, Chapter 5
Context
Smith identifies trade capital as the least productive form of capital employment in terms of the quantity of productive labour it puts into motion. He distinguishes between home trade, foreign trade of consumption, and carrying trade, analyzing their relative contributions to economic growth.
Economic Domain
Exchange