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Critical Reflections on Rothbard’s Concept of Gross Investment

Author

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  • Braun Eduard

    (Institute of Management and Economics, Clausthal University of Technology, Julius-Albert Str. 2, Room 112, Clausthal-Zellerfeld 38678, Germany)

Abstract

This paper critiques Rothbard’s ([1962] 2004. Man, Economy, and State – A Treatise on Economic Principles. Auburn, AL: Mises Institute) concept of gross investment. Rothbard introduced the concept in order to demonstrate his point that it is not consumer spending that primarily drives the economy, like the mainstream Keynesian view maintains, but the capitalists’ spending. In this paper, it is argued that, contrary to Rothbard’s opinion, the amount of gross investment as he defines it does not contain significant information concerning the question as to whether the capital structure of a society can be upheld or not. Instead, it is an arbitrary figure that depends on the length of the different stages of production. This problem has not been recognized by Rothbard because his exposition rests upon the assumption of an equal time length for all stages. Apparently, he has been led astray by his intention to find arguments against the importance of consumer spending in the determination of output.

Suggested Citation

  • Braun Eduard, 2014. "Critical Reflections on Rothbard’s Concept of Gross Investment," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 20(1), pages 1-17, July.
    • Handle: RePEc:bpj:jeehcn:v:20:y:2014:i:1:p:17:n:1
    DOI: 10.1515/jeeh-2013-0001
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    References listed on IDEAS

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    1. Andrew Young, 2012. "The time structure of production in the US, 2002–2009," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 25(2), pages 77-92, June.
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    Cited by:

    1. Anghelache Constantin & Anghel Madalina-Gabriela, 2017. "Econometric Model For Complex Analyses And Forecast Of The Gross Domestic Product," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 5-12, December.

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    More about this item

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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