The Theory of Investment Once More: Mr. Boulding and the Austrians

Frank H. Knight

The Quarterly Journal of Economics, 1935, vol. 50, issue 1, 36-67

Abstract: Altho Mr. K. E. Boulding repudiates superficial features of the "Austrian" theory of capital as a matter of a production or investment period, there is danger that his clever mathematical treatment of the single investment in terms of time may lend support to such a position. Examination of the Austrian theory; its main fallacy lies in attributing production of capital goods to "primary" factors, in ignoring organic cooperation of all productive agencies, and in the fact that all are like capital goods in essential respects, 40.— Examination of Mr. Boulding's analogies of population and of lake and stream shows both faulty, 52.— Relations between two views of capital, as continuous or as cyclically produced, consumed and reproduced; necessity of preferring the continuity view, 63.— Basis of production period fallacies is in a confusion of things with values; value production is always instantaneous; it is impossible to treat the production of new capital as the production of its income yield thru future time, which would make the "period" infinite, 64.

Date: 1935
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