Entrepreneurship, knowledge and employment

The controversy on capital theory in retrospective. An endless unsolved matter.

Voda Ana Iolanda, Alexandru Ioan Cuza University of Iaşi, Romania
Martínez Fernández Ignacio, Seville University
Palma Martos Luis, Faculty of Economics and Business Sciences University of Seville

The foundations of the debate over the nature and role played by capital in the economic analysis can be traced to the very beginning of the Political Economy, with the different view of capital between the British and French classic economists, or even before in the late mercantilist and physiocrat writings. In this paper we intend to present an analysis of the main theories and debates on the nature and role played by capital in the production process and economic development through different stages in the History of Economic Thought. So as to achieve this goal, we present a new literature review on the key elements of the debate with the addition of remarkable authors usually lack represented in the literature, and whose contributions we think can help us to find new answers to the controversy. The paper starts with one of the most important debate on capital which was provided at the turn of the twentieth century by John Bates Clark and Eugene von Böhm-Bawerk. The controversy has his origin partly in the diverse nature of capital and, partly in interest rate determination. The ongoing of this discussion pulled other leading economists as I. Fisher and K. Wicksell in with major contributions, in order to distilled and synthetized the positions of the Neoclassic and Austrian sides. The second part of the paper gives a brief overview on a new generation of economists which lead the next step in the debate with the controversy between F. Knight and F.A. Hayek. The discussion revolves around these fundamentally different conceptions: the role of time in the production process and the permanent or consumable character of capital nature. Like in the previous stage on the controversy, the discussion attracted other brilliant economist in the field as N. Kaldor and P. Sraffa, but this time, this new “players” arise to take strong critic positions over the question, instead of improving the explanations of the “main” authors.

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Keywords: Capital theory, austrian school of economics, economic growth,

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