Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Capital goods: Capital goods are physical assets used by businesses to produce consumer goods and services. Examples include machinery, tools, buildings, and equipment. Unlike consumer goods, capital goods are not directly consumed but are essential for production processes, contributing to economic growth and productivity.See also Capital, Capital structure, Production, Production structure._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Carl Menger on Capital Goods - Dictionary of Arguments
Coyne I 15 Capital Goods/Menger/Coyne/Boettke: Beginning with Carl Menger’s work in 1871, Austrian economists have emphasized the unique characteristics of capital, which refers to goods that are valued because of their contribution to producing subsequent consumer goods. In his Principles of Economics, Menger presented production as a sequential process that involved capital goods (what he called “goods of a higher order”), which are combined to produce final consumer goods (what he called “goods of the first order”). Different capital goods fit into the structure fproduction depending where they fall in the sequential process of producing final goods. The Iowest-order capital goods (those directly prior to the production of the final consumer good) would be second-order goods. Those immediately prior to that would be third-order goods, and so forth through every step of production. >Production, >Production structure. Time/production: Menger's taxonomy of capital goods captured the essential role of time in production. The process of producing consumer goods occurs through time as various capital goods are coordinated to yield a final output. This time-consuming process of production is necessary for economic progress. Using their creativity, people realize that they can forgo direct consumption of higher-order goods today and instead use them as inputs into a good that will not be produced until some point in the future. Value/subjectivity/Menger: In addition to the central role of time, Menger's deep appreciation of subjective value is also evident in his treatment of capital. In his view, the value of capital goods is derived from the expected value of the Iower-order goods they aid in producing. That is, the value of capital goods is not inherent in the goods themselves, but instead is derived from the Iower-order goods in the structure of production. Raw materials do not have inherent objective value, but instead derive their value from what they contribute to the production of Other, value-added capital goods in the structure of production. These Iower-order goods likewise derive their value from their contribution to the production of the final consumer good. What ultimately drives this process is the expected value of the final consumer goods (the first-order goods) as determined by consumers. Market: On the market, these subjective valuations are captured in the market prices of capital goods as discussed in the prior chapter on economic calculation. Lachmann: Taking Menger's framework as a foundation, Ludwig Lachmann further developed the Austrian understanding of capital. He emphasized that capital was characterized by heterogeneity, multiple specificity, and complementarity. >Capital structure/Lachmann._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Meng I K. Menger Selected Papers in Logic and Foundations, Didactics, Economics (Vienna Circle Collection) 1979 Coyne I Christopher J. Coyne Peter J. Boettke The Essential Austrian Economics Vancouver 2020 |
||
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
