Is money capital?

Question

The Oxford English Dictionary defines "capital" as

n. economic goods (e.g. railways, ships, machinery, buildings) destined for use in production (as opposed to consumers' goods).

Historically, the first use of money has been to facilitate trade. According to this, it was only in the past few centuries that money has also been considered capital, and thus capitalists buy and sell money as though it were a productive economic good. Why is this?

How can money be capital? How does money have productive value when money simply facilitates trade? Certainly trade is useful, but is trade productive? Are there contemporary or historical economists who argue money can or cannot be capital?

Answer 1

"...capitalists buy and sell money as though it were a productive economic good."

No they don't. They buy and sell currency, because the price of currency fluctuates (due to imagination and/or economic fundamentals) and so there are profit opportunities there.

Also, they are after liquidity, (i.e. holding money instead of physical capital), because liquidity enlarges the set of feasible economic choices that they can make (but since they have to eventually make some choice, we get to see some physical capital laying around after all).

Money per se is not productive (is just paper, or electronic bits) - but money is not just a medium of exchange, it is first and foremost a socially agreed upon store of value (socially, not intrinsically). This makes it (not just endows it with) purchasing power. People are willing to give up something that has, say, nutritional value, in exchange for an intrinsically worthless piece of paper (or for an even more useless electronic credit in their bank account) -and one can guess why.

Finally, all the financial world of "financial instruments", "derivatives", "futures" etc, is a bit about risk-management but predominantly, is a highly sophisticated betting market, beyond anything that casinos, horse races, soccer, etc have ever imagined or devised as regards betting. Here income and profits come from winning the bet, not because money is productive.

Answer 2

Knut Wicksell, author of Interest & Prices, argues that money ≠ capital:
^{(quoted on p. 8 of Bernard W. Dempsey's Interest & Usury)}

It is usually said that in modern communities, capital (of the mobile kind) is lent in the form of money. But this is a metaphorical and inexact manner of speaking which can easily lead to error. Liquid capital, which is what we are considering, or, in other words, goods, are never lent,—they are never given and taken by way of borrowing; they are simply bought and sold.⁵

and

It is not true that "money is only one form of capital," that the lending of money constitutes a lending of real capital in the form of money, etc.…

Liquid real capital (i.e., goods) are never lent (not even in a system of simple merchandise credit); it is money which is lent and the commodity capital is then sold in exchange for this money.⁶

and 7 Lectures, II, p. 190.:

Money does not enter into the processes of production; it is in itself, as Aristotle showed [in Politics bk. 1 § 10, 1258a-b], quite sterile.⁷