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Unmixing the metaphors of Austrian capital theory

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  • Cameron Harwick

    (SUNY College at Brockport)

Abstract

A complement of metaphors inherited from the classical era has held back progress in Austrian capital theory (ACT). In particular, the attachment to circulating capital as the paradigmatic capital good, largely motivated by the business cycle theory, has locked ACT into a nonoperational point-output model of production. This paper draws out a distinct flow-output approach from work by Lachmann, Lewin, and Cachanosky, contrasts its associated metaphors and paradigms with those of the canonical Hayek-Garrison model, and argues that the former has the potential to bolster both the analytical coherence and the empirical relevance of ACT that it has so far found elusive. By focusing on the investment project rather than the capital good as the object of planmaking, the flow-output approach affirms the core appeal of ACT – a heterogeneous capital structure and a market process approach – by declaring independence from the business cycle theory.

Suggested Citation

  • Cameron Harwick, 2022. "Unmixing the metaphors of Austrian capital theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 35(2), pages 163-176, June.
    • Handle: RePEc:kap:revaec:v:35:y:2022:i:2:d:10.1007_s11138-020-00515-8
    DOI: 10.1007/s11138-020-00515-8
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    References listed on IDEAS

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