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The Theory of Capital as a Theory of Capitalism – Hidden Austrian Contributions to a Historically Specific Approach to Capital

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Abstract

Before economists and sociologists came up with their own definitions of the term “capital,” it was commonly understood as money invested in businesses by their owners or shareholders, and it continues to be understood this way in everyday business practice. In a recent article, Geoffrey Hodgson (2014) advises economists to return to this pre-Smithian usage of the term. The present paper takes up Hodgson’s demand and develops a theory of capital that is based upon this business notion of capital. It also argues that the Austrian theory of capital, if interpreted correctly, can serve as a starting point. Despite the conviction of its adherents to the contrary, the Austrian theory of capital is not universal or ahistorical, but dovetails with Hodgson’s vision of an approach to capital which analyses historically specific features of capitalism.

Suggested Citation

  • Eduard Braun, 2015. "The Theory of Capital as a Theory of Capitalism – Hidden Austrian Contributions to a Historically Specific Approach to Capital," TUC Working Papers in Economics 0015, Abteilung für Volkswirtschaftslehre, Technische Universität Clausthal (Department of Economics, Technical University Clausthal).
    • Handle: RePEc:tuc:tucewp:0015
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    1. Geoffrey M. Hodgson, 2014. "What is capital? Economists and sociologists have changed its meaning: should it be changed back?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(5), pages 1063-1086.
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    More about this item

    Keywords

    Capital Theory; Capitalism; Austrian Economics; Institutional Economics;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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