Strategies for Economic Development (II)

In this chapter we shall discuss some problems of capital formation in time and space. In a sense it is economic growth which forced on our consciousness the difference between wealth and capital. With the development of commerce a distinction was made between wealth and stock. The latter was that part of wealth which was used in trade in the expectation of a positive return or a surplus over and above expenses. Since expectation has reference to something happening in the future, capital has a time dimension. In its concrete form it must also have a location. But this is not a special feature of capital; for instance, land and labour must also exist in space. Economists have, therefore, paid special attention to the time aspect of capital, often to the exclusion of other aspects. Theories of capital have been developed on this basis. This is a kind of abstraction which has helped analysis in some ways. But the sectoral and spatial distribution of capital has an importance of its own; and we are sometimes led to wrong conclusions when we meditate too long on capital in time to the exclusion of capital in space. But we shall come to that later.