scholarly journals Carl Menger’s revisited theory of capital in opposition to the Classical and Marginalist scholars’

2021 ◽  
Vol 9 ◽  
Author(s):  
Samuel Fernandes Lucena Vaz-Curado
Keyword(s):  
Production Process ◽  
Turning Point ◽  
Capitalist System ◽  
Capital Theory ◽  
Monetary Economies ◽  
Austrian Capital Theory ◽  
Austrian Capital ◽  
Common Parlance ◽  
Carl Menger ◽  
Economic Goods

Among several contributions, Carl Menger proposed a division of economic goods in orders. This sets the foundations for the Austrian capital theory, usually maintained as a complex of higher orders goods in a production process. Curiously, Menger dismissed this concept of capital, in favor of one used in common parlance. This change of view is often overlooked, but represents a turning point in the field of capital theory. This paper assesses how Menger's popular notion of capital differs from the scientific one. To achieve this goal, we investigate the concept of capital in Classical and Marginalist economists. One of the implications is that the popular concept is related to the theory of capitalism. Capital, as used in business language for economic calculations, is better suited for analyzing the capitalist system, as it captures the usage in monetary economies and business accounting.

CARL MENGER AND HIS FOLLOWERS IN THE AUSTRIAN TRADITION ON THE NATURE OF CAPITAL AND ITS STRUCTURE

2011 ◽  
Vol 33 (3) ◽  
pp. 357-384 ◽  
Author(s):  
ANTHONY M. ENDRES ◽  
DAVID A. HARPER
Keyword(s):  
Structural Analysis ◽  
Fundamental Question ◽  
Causal Role ◽  
Capital Theory ◽  
Philosophical Position ◽  
Austrian Capital Theory ◽  
Austrian Capital ◽  
Carl Menger ◽  
Austrian Tradition

We examine various, sometimes divergent, conceptions of capital and its structure in the Austrian tradition from Menger (1871) to Lachmann (1956). We outline Menger’s methodological and philosophical position that recommends investigating the morphology of capital—its shape, form, and structure; it also recommends maintaining some “realisticness” in the treatment of capital in economics. Prominent Austrian contributions are examined and compared along various dimensions: the existence or otherwise of “original” factors of production; time conceptions; analytical domain assumptions; real and money capital doctrines; the causal role of the entrepreneur in creating capital; and the fundamental question of capital aggregation into a stock or fund. We consider the extent to which Menger’s avowed followers and successors diverged from his original vision of capital, subsequent consequences for the development of Austrian capital theory, and implications of Mengerian structural analysis for the study of capital more generally.

Austrian Capital Theory

2019 ◽  
Author(s):  
Peter Lewin ◽  
Nicolas Cachanosky
Keyword(s):  
Capital Theory ◽  
Austrian Capital Theory ◽  
Austrian Capital

Capital Valuation, What is it and Why does it Matter? Insights from Austrian Capital Theory

2017 ◽  
Vol 12 (s1) ◽  
Author(s):  
Peter Lewin
Keyword(s):  
Social Systems ◽  
Social Process ◽  
Austrian Economics ◽  
Market Process ◽  
Capital Theory ◽  
Business Valuation ◽  
Future Earnings ◽  
Productive Activities ◽  
Austrian Capital Theory ◽  
Austrian Capital

AbstractThe ability to rationally evaluate time-consuming productive activities is what distinguishes capitalism from alternative social systems. Capital-accounting provides the framework for such evaluations that allow decision-makers to calculate the relative values to them of alternative productive activities. In this paper I show how insights from Austrian Capital Theory help to understand this process of evaluation. Austrian economics stresses that evaluation is an essentially subjective process. Entrepreneurs’ estimates of future earnings, which depend on the consumers’ subjective evaluations of the produced products, will vary and they must compete for productive resources in a dynamic trial and error social process. Entrepreneurial evaluations, nevertheless, can be described in terms of familiar financial concepts that encapsulate both the capital-value and the duration of any contemplated business venture. Value and time are the two essential dimensions of dynamic business valuation. I examine these concepts with a view to describing that social process, using what can be known and what needs to be imagined. I conclude that there is no silver bullet formula or method to evaluate a business that would give an objectively correct answer – obviously not, or else we would not have need of a competitive market process – but there

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