Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: The relation between statics and dynamics / John Maurice Clark

Collection:: Economics Books

66 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK and use them. If they are not forthcoming, an increased flow of money into the coffers of entrepreneurs may not increase the physical amount of capital, but only raise the prices of the constituent “capital goods.” * Thus for certain purposes, to find if capital can be increased, we must look to the supply of facili- ties for the production of the capital goods on which the funds in question are destined to be spent. America’s war-effort to make guns, airplanes and ships is an illustration of the kind of limitation we are considering. There was no lack of funds, but the mobilization of funds far outstripped the fastest possible mobilization of the machines-to-make-the-machines to make the guns and other specialized equipment. The limiting factor was not capital in a financial sense, but physical capacity to make capital goods. If the capital goods are available, certain kinds and amounts are selected and fitted together into what is really a new organ- ism: the productive equipment of a going concern. This main- tains its existence by the process of replacement. It may be viewed as investment, at original of reproduction cost; or it may, finally, be viewed as capitalized earning power or as rights therein; these being the last but not the least important members of this family of concepts. Where the problem is static, most of these different phases of the process involved in capital may be ignored, and attention focussed on original savings and on the resulting fund of pro- ductive equipment. No error is involved in assuming that the loan fund of purchasing power goes hand in hand with original savings and automatically calls into being a corresponding amount of capital goods, while there would be no discrepancies between original cost of equipment, reproduction cost, and capitalized value of earning power. Earning power would depend on technical productivity and not on other factors. An interest- ing test of this proposition is found in the fact that Bohm- Bawerk’s concept of a time-period of production and J. B. Clark’s concept of a fund of technical equipment are for static purposes so close together that there is a prima facie case for the position that they are in effect identical and interchangeable, in the realm 1 An extreme assertion of this fact is found in Veblen: Absentee Owner- ship, pp. 86-8. His view here is like that variant of the wages-fund theory in which the wages-fund consists of goods destined to be consumed by labor. Veblen implies a capital-goods-fund of similar character.

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