Capital only has economic meaning if it is maintained. Capital maintenance concepts define the boundary between income and capital preservation, and therefore determine what may legitimately be consumed, distributed or taxed without undermining future economic capacity.

Five capital maintenance concepts are required for a coherent political economy.

1 - Financial capital maintenance

Financial capital maintenance holds that capital is maintained if the monetary value of the asset base is preserved.

Under this approach:

• Nominal or inflation-adjusted asset values define capital
• Asset price appreciation may be treated as income
• Financial returns dominate accounting and policy decisions

This approach abstracts entirely from productive capacity and environmental constraint. It enables capital distributions to be made while physical and environmental capital are depleted. It is the accounting foundation of financialised capitalism.

2 - Physical (real) capital maintenance

Physical capital maintenance holds that capital is maintained only if productive capacity is preserved.

Under this approach:

• Income exists only after depreciation, maintenance and renewal are fully provided for
• Asset price inflation alone does not constitute income
• Infrastructure, skills and organisational capacity must be sustained

This concept restores a link between income and real economic capability, but it remains incomplete because it treats the environment as external or inexhaustible.

3 - Environmental capital maintenance (embracing sustainable cost accounting)

Environmental capital maintenance holds that capital is maintained only if natural systems are preserved at levels consistent with their regenerative capacity.

Under this approach:

• The environment is treated as a capital stock, not a free input
• Environmental degradation constitutes capital consumption
• The sustainable cost of restoring ecosystems to safe operating limits must be recognised

Sustainable Cost Accounting makes this explicit by calculating the cost that would need to be incurred to prevent or reverse environmental harm. Where that cost is not provided for, apparent income is in fact the liquidation of environmental capital.

Environmental capital maintenance is not optional. Without it:

• Physical capital cannot be sustained
• Financial capital claims become fictitious
• Intergenerational equity is violated

From a Funding the Future perspective, environmental capital maintenance is prior to both physical and financial capital maintenance. No economy can be said to generate income if it is destroying the conditions of its own reproduction.

4 - Human capital maintenance

Human capital maintenance holds that capital is maintained only if people's physical, mental, educational and creative capacities are sustained and renewed over time.

Under this approach:

• Health, education, nutrition, housing security and rest are capital maintenance costs, not discretionary consumption
• Skills depreciation, ill health, burnout and exclusion constitute capital consumption
• Income exists only after the costs of maintaining human capability are fully provided for

Human capital is not self-renewing. It requires continuous investment across the life course. When wages, working conditions, public services or social protections are insufficient to sustain human capacity, apparent profits represent the extraction of value from people rather than genuine income.

Failure to maintain human capital results in declining productivity, rising healthcare costs, social fragmentation and political instability. These outcomes are not externalities: they are the predictable consequences of treating people as expendable inputs rather than as capital requiring care and renewal.

5 - Social capital maintenance

Social capital maintenance holds that capital is maintained only if the institutions, relationships and norms that enable cooperation, trust and democratic participation are preserved and strengthened.

Under this approach:

• Public institutions are treated as capital assets requiring upkeep, accountability and legitimacy
• Rights of representation, legal integrity and administrative competence are capital maintenance conditions
• Social trust, cohesion and shared purpose are recognised as economically productive capacities

Social capital is depleted by corruption, inequality, exclusion, privatisation of public purpose and the erosion of democratic accountability. When social capital is run down, economic activity becomes more extractive, more coercive and less resilient.

Apparent economic efficiency achieved through weakened regulation, degraded public institutions or suppressed democratic voice is therefore a form of capital liquidation. It transfers value from collective future capacity to present private gain.

NB It is expected that this entry will be expanded in due course.