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Substance and semantics: The question of capital


  • Lewin, Peter
  • Cachanosky, Nicolás


The perennial question ‘What is Capital’ has been getting some attention recently. Although the distinction between capital as a financial construct and capital as a collection of physical production-goods is well known, we argue that the former concept is undepreciated. The two concepts are often conflated in practice, and the relationship between them is seldom well understood. We spell out the financial concept of capital emphasizing its importance as an indispensable instrument of calculation and accounting. We consider some views of human, social and other capital and how we differ from them. We present reasons for rejecting the notion of an aggregate production function in standard growth theory (which uses the notion of an aggregate stock of physical capital) and as recently used by Thomas Piketty in his well-known work.

Suggested Citation

  • Lewin, Peter & Cachanosky, Nicolás, 2018. "Substance and semantics: The question of capital," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 423-431.
  • Handle: RePEc:eee:jeborg:v:150:y:2018:i:c:p:423-431
    DOI: 10.1016/j.jebo.2018.01.024

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    References listed on IDEAS

    1. J. Felipe & J.S.L. McCombie, 2014. "The Aggregate Production Function: 'Not Even Wrong'," Review of Political Economy, Taylor & Francis Journals, vol. 26(1), pages 60-84, January.
    2. Franklin Fisher, 2005. "Aggregate Production Functions: A Pervasive, but Unpersuasive, Fairytale," Eastern Economic Journal, Eastern Economic Association, vol. 31(3), pages 489-491, Summer.
    3. Braun, Eduard & Lewin, Peter & Cachanosky, Nicolás, 2016. "Ludwig von Mises's approach to capital as a bridge between Austrian and institutional economics," Journal of Institutional Economics, Cambridge University Press, vol. 12(04), pages 847-866, December.
    4. Geoffrey M. Hodgson, 2014. "What is capital? Economists and sociologists have changed its meaning: should it be changed back?," Cambridge Journal of Economics, Oxford University Press, vol. 38(5), pages 1063-1086.
    5. Jesus Felipe & Franklin M. Fisher, 2003. "Aggregation in Production Functions: What Applied Economists should Know," Metroeconomica, Wiley Blackwell, vol. 54(2-3), pages 208-262, May.
    6. repec:bpj:jbvela:v:12:y:2017:i:s1:p:9:n:2 is not listed on IDEAS
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    More about this item


    Capital; Money; Finance; Ownership; Collateral; Alienability; Human capital; Social capital; Production-function;

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity


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