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Value and capital: Austrian capital theory, retrospect and Prospect


  • Peter Lewin

    () (University of Texas at Dallas)

  • Nicolás Cachanosky

    () (Metropolitan State University of Denver)


Abstract The time is right for a reexamination of Austrian capital-theory. We attempt to capture the essence of Carl Menger’s approach to capital, highlighting the important distinction between goods and the valuable services they yield (implying that goods are valuable only because they yield valuable services) and highlighting also the importance of money in facilitating exchange and production and in providing the means to value them. We look at the capital-theory of Böhm-Bawerk and suggest that, in many respects, this was a wrong turn, although it did set in motion valuable efforts to clarify the importance of the heterogeneity of productive-resources and their growing complexity over time. We examine the production-function, micro and macro, and show that it is logically untenable and useless as an instrument for empirical investigation, and that this has been known for decades. Of the Austrians after Menger, only Mises followed Irving Fisher in focusing on valuation. He did so in the context of explaining the importance of calculation. Mises’s approach to capital has been insufficiently understood and appreciated. By way of conclusion we draw from our considerations to provide a research agenda in Austrian capital theory.

Suggested Citation

  • Peter Lewin & Nicolás Cachanosky, 2018. "Value and capital: Austrian capital theory, retrospect and Prospect," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(1), pages 1-26, March.
  • Handle: RePEc:kap:revaec:v:31:y:2018:i:1:d:10.1007_s11138-016-0374-8
    DOI: 10.1007/s11138-016-0374-8

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    References listed on IDEAS

    1. Cohen, Avi J., 2010. "Capital Controversy From Böhm-Bawerk To Bliss: Badly Posed Or Very Deep Questions? Or What “We” Can Learn From Capital Controversy Even If You Don'T Care Who Won," Journal of the History of Economic Thought, Cambridge University Press, vol. 32(01), pages 1-21, March.
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    1. repec:jpe:journl:1477 is not listed on IDEAS
    2. Fratini, Saverio M., 2018. "A note on re-switching and the neo-Austrian concept of the average period of production," MPRA Paper 87306, University Library of Munich, Germany.
    3. repec:zbw:espost:181653 is not listed on IDEAS
    4. repec:kap:revaec:v:31:y:2018:i:3:d:10.1007_s11138-017-0407-y is not listed on IDEAS


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