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My English teacher once jovially remarked that if I were to ever fully understand literature texts by native English writers, I would have to have cultural capital. He went on to add that I wouldn't exactly understand what the term means precisely because I don't have some in the first place.

A quick Google search led me to a Wikipedia article on the term. From whatever I can sense from the article, I figured it refers to the cultural background that a native speaker gets from their upbringing. It seems to me that without cultural capital, one cannot pickup inside-jokes and other little nuances that require cultural immersing.

How close am I in the understanding of the term and what good does it provide in terms of better learning the language?

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You are definitely on the right track. Many of the nuanced phrases and figures of speech in a language come from an intimate knowledge of the culture surrounding it. A good example would be pop culture references. Another is region specific stereotypes or traditions. If a foreign national was spending time in America and had no knowledge of the politics of the country, it may be very confusing to hear someone referred to slightingly as "such a liberal". The speaking party may assume that their listener knows all the connotations associated with "liberals" in the USA, but without some "cultural capital", the visitor may not.

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A capital in this context means the sum of wealth, savings, assets. It's usually applied to money, valuables, wares and other sellable property - company's capital is the value of all its assets.

The "cultural capital" is the sum of your knowledge about culture, skills related to culture, gained sensitivities. You read books, appreciate art, discuss non-obvious facets and symbolics of it, learn its history, importance, influences, dependencies. Become more cultured yourself, and hone your skills both in creation and in appreciation of culture. This all builds your cultural capital - and the more you have of it, the more difficult and sophisticated art you can recognize. For most people Picasso's paintings are a random mix of shapes without meaning. You need significant cultural capital to really understand the genius contained within them.

Do not confuse with "Cultural capital of [a country]". In this meaning, Capital is used as the Main City. While Rome is the official capital city of Italy, Venice is its called its cultural capital.

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KenB has pretty much got it. I just want to add to the 'what good does it provide in terms of better learning the language?' part of the question.

As to the correct use of the language, 'cultural capital' plays very little part. Your teacher mentioned understanding literature texts, which is a different matter. The literature of a culture might contain instances of cultural reference points like those mentioned in other answers, without providing an explanation. You need the cultural capital to understand the meaning behind these references in the literature, but not to understand the language and how it works.

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