INTRODUCTION to 4Capital Theory
We all live in capitalist societies now, and we
may think we know the meaning of the term 'capital' very well. Actually,
most people only refer to money or durable material goods when talking
about capital. That is, most people only know one type of capital, which
is material capital. However, there are four major types of capital:
material capital, intellectual capital, social capital, and spiritual
In today’s social science research, besides the
material capital measured by money, both intellectual capital and social
capital have been widely used as useful concepts to describe modern
economic and social developments. Recently, there has been a surge in
the study of spiritual capital by social science researchers, business
consultants, and religious workers. Many people believe that spiritual
capital is even more important than other types of capital in terms of
improving individuals’ happiness and enhancing organizational
performance or even national development.
Simply speaking, material capital includes funds
and other durable goods, all of which can be measured by money.
Intellectual capital refers to knowledge and skills that may be used to
generate wealth. It is often measured by education level and
intellectual property, such as copyrights and patents. Social capital
reflects the value of social networks, which is often evaluated by
internal trust and friendships among members, as well as the external
reputation for any individual or organization.
Spiritual capital, as a new emerging social
science concept, is considered difficult to define and measure. For
people believing in God, spiritual capital may be considered as the
degree of connectedness with God. For others, spiritual capital can be
evaluated by commitments to certain noble life purposes and moral
standards. Some scholars, including the author Dr. Alex Liu, claim that
everyone has some unique spiritual assets. The usage and materialization
of these spiritual assets form the spiritual capital of the users.
Though many researchers have studied all these
four types of capital separately, Dr. Alex Liu may be the first person
to study the relationship among these four capitals. Based on his
measurement of these four capitals and their impacts on life
satisfaction, organizational performance, and national development, Dr.
Liu has developed a 4Capital theory and has proposed a new concept
called the optimal 4Capital combination. The 4Capital theory claims that
the 4Capital combination determines the life satisfaction of
individuals, the performance of organizations, and the development of
The 4Capital theory also claims that the
excessive ownership of one type of capital is often the main cause of
many human problems. An optimal combination of the 4Capitals is the best
way to ensure individual happiness, excellent performance of
organizations, and social harmony.