Capital widening and deepening are two classifications of investments based on how capital investment relates to labor. Because of the way our current system is structured, money capital is scarce and human capital is abundant, so these terms have developed to discuss how they relate to one another.

Human capital is the base of our human society, each person in this life will do something, generally producing a good or service, and by doing what they do they will get what they need or something with which they can trade for what they need, either money or a commodity or trade good.

Capital stock in infrastructure, machines and tools develop over time through the reinvestment of profits, and when an existing nation, industry or company wants to invest more money in a certain venture or sector, they can do it in one of two ways in relation to labor, that is the people, and these are capital widening or deepening.

Capital widening makes it possible for more people to work. Say we are talking about the garment industry. If we have 100 sewing machines, we can have 100 operators, some managers and errand runners, plus the facilities management. To widen this industry, we can invest in some more tables and more sewing machines. This widens our business, allowing us to put more than 100 operators to work. For every sewing machine we invest in, we can increase employment and output by at least 1 worker.

Capital deepening are investments that increase productivity per worker. Job training, ergonomic chairs, better lighting; these are examples of investments that would make each of the original 100 workers more effective at the job they are already doing, leading to more garments produced per time period.

The decision between which will depend on a variety of factors, the local environment and the economy at large. WIth a vast and inexpensive labor force ready to work, as experienced in some areas of the developing world, in an industry that doesn't need much training or education, capital widening is always going to be more profitable. This is because no marginal decline on production will be felt until the physical infrastructure is maxed out or the labor force depleted.

As the labor force becomes more and more competitive and educated, profitability will gradually switch to capital deepening. Making each employee more productive can be incredibly profitable at first, but will rapidly show marginal decline. Yesterday's ergonomic chair is not so far behind today's ergonomic chair, and increased training beyond the basics can only improve productivity so far.

Now, things like new or upgraded machines are deepening, but can also be widening if it requires more employees to operate. So there is nothing saying that a capital investment has to be one or the other, in fact most comprehensive investments in an existing business will be both, and any investment in a new business just starting will be by necessity both widening, by increasing employment, and deepening, increasing productivity per worker.

The benefits of capital investments, of both types are an increase in profitability. Profit is the amount of earnings over costs, and profits are what can be re-invested into capital, both human and manufactured. The accumulation of wealth from past profits is what defines the rise and fall of our civilization, the infrastructure, buildings, machines, roads, intellectual advancements, books, videos, houses, tools and others all represent somebody's profits.

When a worker takes a job, they are an expense to the business, but their wage is generally considered to be profit for them, and their family. With it they will spend and invest. With capital widening, there are more employees earning, and thus more people in an economy with income to spend. With capital deepening, each worker will become more productive, and thus should, over time, be able to demand a higher wage. This leads to different type of spending by the same workers, shifting consumption towards more luxury goods.

A preference is perhaps the wrong question for a company, both are needed to find the most profitable point at any one time. But as an individual, and life-long learner, I am a huge proponent of capital deepening through education. Each of us must deepen our own human capital, and thusly learn the skills necessary to demand a living wage in the market.