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Time and Capital in Dynamic and Spatial Economic Theory

Author

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  • Andersson, Åke E.

    (Jönköping International Business School)

Abstract

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).

Suggested Citation

  • Andersson, Åke E., 2012. "Time and Capital in Dynamic and Spatial Economic Theory," Working Paper Series in Economics and Institutions of Innovation 275, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0275
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    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp275.pdf
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    Keywords

    Public capital; time scale; economic theory; Austro Swedish schools;

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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