Some have always struggled to find the best way to conceive of the process by which value creation occurs in capitalist societies. What is the capital to which "capitalist" refers? In this working paper, Baetjer and Lewin claim that capital is naturally, and at least since Adam Smith has been, conceived of as part of a dynamic value creating process, in which individual capital items are heterogeneous, complementary components of an extensive, but everchanging, structure of production. In such a conception capital is not a quantifiable aggregate of durable things that have been constructed by past labor, subject to physical deterioration. Rather capital refers to the ability of combinations of things and ideas to produce value over time, whether or not they are the result of past construction and whether or not they are subject to physical deterioration. Value is necessarily forward looking; it relates to aims or purposes yet to be carried out, and capital value is a necessary aspect of capital. There is an indispensable knowledge component to all productive resources-all capital: physical, human or social. Physical things are not capital. Without ideas capital does not exist.