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> Modern forms of capital, such as software, depreciate faster in value than equipment did in the past: a giant metal press might have a working life of decades while a new piece of database-management software will be obsolete in a few years at most.

Is software even capital? Isn't this part of why we've been arguing against software patents for years now? Obviously software and other forms of intellectual property have value, but to me capital is something used to produce valuable products, not the products themselves. Maybe the firmware for some CNC machine is capital?

Are books capital because you can make movies out of them?

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The economist is taking the position of the buyer (not maker) of software -- the prototypical business that buys a CRM tool to manage its customer relationships.

Seen as a good that increases the productive capacity of a company or the economy more generally, it seems software very much is capital.

Do they buy a CRM tool, or do they just license the use of one? My understanding is that it's almost impossible to really "buy" and "own" commercial software, you can only acquire a license to use it.

If the license lasts any period of time then it's still capital, albeit capital that depreciates quickly.

I don't think the argument about software patents is related to capital.

The argument for patents is that it encourages people to invent things, because they have a guarantee of exclusive use which makes it easier to make money from their invention. It also encourages people to make inventions public instead of keeping things secret and then the knowledge being lost, since that's required as part of obtaining a patent. The US Constitution spells this out explicitly: the purpose of patents and other such things is "To promote the progress of science and useful arts...."

The arguments against software patents are basically that it doesn't have the desired effect. Much of what gets patented gets rediscovered independently, and thus it doesn't seem to actually encourage innovation. Nobody seems to ever go digging through patent archives looking for useful software techniques, so the fact of making patented inventions public also doesn't help.

None of this has much to do with software as capital, which would work much the same with or without software patents.

Broadly speaking, economics talks about three categories of things: Land (natural resources), Labor & Capital.

Looking at things from this perspective, capital includes everything from carpet, books and desk chairs to massive heavy industry factory machinery.

A source: http://www.henrygeorge.org/def2.htm

In some cases, software allows the rapid accumulation of wealth for owners and that fits the definition of a capital good.

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