Knowledge Always Comes Before Capital
Had an interesting shower thought about the relationship between knowledge and capital.
Essentially, I've concluded that Knowledge creates the need for Capital. This could be done in- 1) We've learned something new and from it we see new possibilities of new ventures (business ideas, new tech, new cultural shift, etc...) & 2) We want to solve a specific problem and how we do it is enabled by a specific set of Knowledge.
Now, in order to carry out these new ventures, we of course need Capital. So, in short, Knowledge always comes before Capital. (Note that Knowledge doesn't always LEAD to Capital). And of course, capital leads to economic activity, which leads to value creation.
So when we hear the role of Capital in econ and finance classes, I feel like we're not getting the full picture because Knowledge always needs to come before Capital.
Interested in hearing some thoughts. I think I hit on something fundamental on how our economy is shaped. Or is this a no-brainer?
EDIT: Couple additional points I just realized. Once value is created, it's monetized as investment returns (including cash and cash equivalent payments like dividends) or through income. This newly created money is in addition to what already existed. And when Knowledge couples with other factors like Market Forces, it sparks new need for Capital. Because previously created value added more money to the system, now theoretically, more Capital is accessible (the maximum threshold for Capital has increased). This is how the economic growth works.
TL;DR: I think I discovered (in my own way) how economic growth works. And it works like this: Knowledge -> Capital -> Value Creation -> Back the Knowledge. New Knowledge or new use of Knowledge sparks the need for Capital as new ventures start popping up. When these ventures create value, they add on to the amount of money that is available (ie. GDP). Now, more Capital is (theoretically if we don't use up all of it in spending) available for more growth.