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On Working and Circulating Capital


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  • Meacci, Ferdinando


The purpose of this paper is to investigate whether the terms “working” and “circulating” capital are two different terms for the same concept; or whether they should be considered two different terms for two different concepts. This purpose will be carried out in two steps. The first is devoted to an investigation of the use of the term “working” by the German economist Lowe (The Path of Economic Growth) and by some Austrian economists (Menger, Böhm-Bawerk, Hayek). The second is devoted to Keynes (A Treatise on Money). At the end of each step an assessment is made of the use of this term by these economists with an extension to the relationship between Lowe’s and Keynes’s treatment of their notion of working capital and two preceding streams of thought. These relationships run between Lowe and the Austrians, in the first case; and between Keynes and the classics (in Marx's sense), in the second. These assessments will eventually converge towards the conclusion that the terms “circulating” and “working” capital are not two different terms for the same notion; and that these two notions are different because they belong to two different theories and require two different methods. The paper argues that the two theories are the classical theory of reproduction and the modern theory of fluctuations as a special branch of the modern theory of production; while the two methods are the method of vertical integration and the method of horizontal integration. The identification of these theories and methods will be pursued more keenly than the differentiation of the two notions of “working” and “circulating” capital in that the aim of this paper is not to resort to the “bestiary” of our subject as if it were a “taxonomy”, let alone to the “taxonomy” as if it were a “machine” (see Shackle: The Years of High Theory, 1967, p.293).

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11763.

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Date of creation: Oct 1997
Date of revision: 23 Dec 2008
Handle: RePEc:pra:mprapa:11763

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Keywords: Circulating and working capital; reproduction and production; Lowe; Keynes; Austrians;

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  1. Jevons, William Stanley, 1866. "Brief Account of a General Mathematical Theory of Political Economy," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, McMaster University Archive for the History of Economic Thought, vol. 29, pages 282-287.
  2. Jevons, William Stanley, 1871. "The Theory of Political Economy," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, McMaster University Archive for the History of Economic Thought, number jevons1871.
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