4Capital and Performance


By Dr. Alex Liu






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 capital.

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 nations.

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.



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