Capital in the new economy: A Schumpeterian perspective

Jim Stewart ()
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Jim Stewart: Trinity College

A chapter in Entrepreneurships, the New Economy and Public Policy, 2005, pp 163-179 from Springer

Abstract: Abstract The “dotcom boom” and subsequent collapse raises issues as to the nature of capital and the relationship between capital and investment. Capital in conventional finance, based on the Fisher-Hirshleifer analysis, is defined as postponed consumption and investment is defined as a trade-off between consumption now and in the future. This paper argues that a more satisfactory explanation of the relationship between investment and capital was developed by the Austrian economist Böhm-Bawerk, who identified capital goods as separate from consumption goods, and where the passage of time is fundamental to the accumulation of capital. Such a process assumes risk rather than uncertainty, and does not capture the essence of Schumpeterian investment.

Keywords: Capital theory; Investment; Neoclassical; Austrian; Schumpeterian (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-540-26994-6_10

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DOI: 10.1007/3-540-26994-0_10

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