The Property Fallacy in Capital Theory and Corporate Finance Theory

David Ellerman ()
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David Ellerman: University of Ljubljana

Chapter Chapter 3 in Putting Jurisprudence Back Into Economics, 2021, pp 63-76 from Springer

Abstract: Abstract The Fundamental Myth, that the rights to the (whole) product of production (and the management rights) in a productive opportunity are part and parcel of the ownership of capital (the “means of production”) was introduced and explained in Chap. 1 . In this chapter, it is shown how the Fundamental Myth is baked into the simple formulas for the valuation of capital assets used actively (i.e., by hiring in a complementary set of inputs and then selling the produced outputs) as well as into the sophisticated formulas of Miller and Modigliani in corporate finance theory.

Date: 2021
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DOI: 10.1007/978-3-030-76096-0_3

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