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The aim of the paper is to evaluate Veblen’s understanding of capital as knowledge. According to Veblen, the Classical-Austrian theories of his time are concerned with “pleasant feeling”, which is produced only by physical objects. Things are capital by as much as they serve the end of pleasant feeling. Capital, therefore, is tangible since only tangible goods could stimulate such feelings. Moreover, Veblen argues that the concept of capital is a natural category in these theories, in other words, it runs through the facts of any given economic era and situation, be it industrialized societies or hunter gatherers. On the other hand, according to Veblen, the concept of capital should be defined by observation rather than by deduction. In this regard, conceptualization of capital of his time does not provide an explanation for the evolution of intangible assets, i.e. the role of knowledge. However, close examination into the origins and development of capital reveals the fact that the importance of tangible assets in the definition of capital is only a contemporary event. Only with the relative growth of material equipment, where it becomes important to have or not to have those equipment, tangible assets become important and advantageous to the ones who have it. And, it is only with the development of property rights that the ownership of tangible assets gained advantage in comparison to intangible assets. According to Veblen, a serviceable definition of capital should be found in the habits of thought of businessmen. For them, capital refers to a magnitude that changes day by day, so that it stands in no relation to a material magnitude. Besides, the problem with the treatment of intangible assets leads to the total ignorance of the knowledge base of capital. Veblen claims that man has never lived in an isolated form as in the theories of Marginal Economists. There is no production without technical knowledge, and no technical knowledge without industrial community. Veblen’s understanding of capital as knowledge can shed light on contemporary discussions on the importance of intangible assets in the knowledge economy. Today, knowledge has not only become vital for production, but also, with the development of intellectual property rights, a battle ground for interest groups around the world.

knowledge, capital, intellectual property rights, Thorstein Veblen