Time and Capital in Dynamic and Spatial Economic Theory
One of the claims of this paper is that three Austro-Swedish schools of economics provided much of the foundations for almost all of economic analysis developed after the second world war. Important representatives of the first school are Böhm-Bawerk and Wicksell, Schumpeter and Hayek of the second school, and Cassel, Wald and von Neumann of the third Austro-Swedish school of economics. However, there are serious omissions in all the three approaches to economic theory. The most striking is the lack of an analysis of the role of non-material and material public capital (or infrastructure) in the growth and development of economies. In this paper I demonstrate the theoretical approaches necessary for an extension of economic dynamics to develop the theories and models of these schools of economics. In this paper I furthermore show that a proper refocusing on the time dimension can also shed light on the dynamics of economies in space. Three approaches are necessary for such a synthesis. 1.Subdivision of products and systems of production according to their different and always positive durability, implying that everything produced is capital. 2.Subdivision of products according to the time used in their production. 3.Subdivision into private and public goods, allowing for non-linearity. 4.Allowing for differences in time scales of economic processes. With these distinctions it can be shown that the economic development in time and space is determined by the impact of economies of scale, duration of the production process, durability of products and the - relative to most other kinds of capital - much slower growth of public capital (i.e. material and non-material infrastructure).
|Date of creation:||07 May 2012|
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