Article On Value Of Money
The colloquial understanding of capital as financial-capital is after-all close to the mark, at least closer than thinking of capital as a collection of physical things. The latter is perhaps responsible for more confusion and controversy than clarity. A consideration of the role of time in production and investment decisions, as explored in this paper, brings one to the realization that capital is the result of a process of evaluation. Capital is the result of 'capital-accounting'. It is the ability to use capital accounting that is in large part responsible for the phenomenal success of capitalism. Productive physical resources, whether natural or produced, are either never capital in this sense or else are all capital. They are never capital in their pure physical nature. But they are all different types of capital, human or non-human, when considered as a stock of potential value over time. What is the best way to think about capital? Yeager (1976) suggests that it makes sense to think of capital as a stock of 'waiting' whose price is the interest-rate. Some combination of D (duration) and NPV, an amalgam D-NPV may capture this idea and the subtle way in which time and value interact in economic life. Is capital (as opposed to a capital-good) a factor of production? Yes, if you consider it necessary for production to occur. Physical inputs have to be financed, in the broadest sense of that term, because they have to be deployed over time, and can be so deployed in various configurations. That is the function of capital, a valuable function, for which there is a scarcity-price, the rate-of-interest. But it is not physically measurable. As explained above, it is the result of the interplay between the time-value of money and the money-value of time so nicely captured in the concept of duration.
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What is Capital? (Again)
Contributions from Finance and Economics
Peter Lewin
Naveen Jindal School of Management
University of Texas at Dallas
800W Campbell Road,
Richardson, TX 85080
Nicolás Cachanosky
Department of Economics
Metropolitan State University of Denver
Campus Box 77, P.O. Box 173362
Denver, CO 80217
What is Capital? Again.
Contributions from Finance and Economics
1. Introduction: The Time-Value of Money and the Money-Value of
Time – The Connecting Role of Duration
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Time Period Technique
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Technique
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Relative Costs
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References
=# 3 +::9, ! *J G A Journal of
Applied Finance, 16+,#7<<79:
=#3#P#3#F(#+78H6,!J!S
=A>Financial Analysts Journal, 39+<,#7I6I
=#P+7869,(-J"* Economica, 12+6,#<<:<<
*#L#FC#A+:7<,">*J
(* Review of Political Economy, 26+<,#
9<H99I
# 3 +78:6, The Nature and Necessity of Interest. CJ >#
L0 JP*#78;7
#U+::H,(** /( =?
= T * Journal of the History of Economic Thought, 30+,#
7I7%7;7
# U# F G# 3 +::6, G
Journal of Econonomic Perspectives, 17+7,#7887<
#U#FG#3+::6,J"
U3GJournal of Economic Perspectives, 17+<,#
66
#C# F #"C +78;7, " -"J
" = LY 4 @ Journal of
Business, 44+<,#<:H<67
3#"+::9,"B""-"P#
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![Nicolas Cachanosky]()
In this paper I present a financial framework, known as Economic Value Added or EVA®, used to value firms and apply it to topics highlighted in the Austrian literature. In particular I contrast the market process emphasis in the Austrian literature with the neoclassical firm profit maximization and the role of Kirzner's entrepreneurial alertness. Then I show how these micro topics can be aggregated into macro issues such as the Cantillon Effect, an aggregate average period of production, and the impact of country risk into value creation.
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![Geoffrey Martin Hodgson]()
This article traces the historical usages of the term capital and the explosion of different types of supposed 'capital' in the twentieth century, including 'human capital' and 'social capital'. In medieval and early modern times, capital meant money investable or invested in business. This meaning persists in business circles today. In contrast, Adam Smith treated physical assets, machines and people as 'capital' and this different usage has dominated economics since. The pre-Smithian meaning referred to money or other saleable assets that could be used as collateral. This article questions the change in meaning by economists and sociologists and highlights the importance of collateralisable property for capitalism. 'Human capital' can only be collateral if the humans involved are slaves. 'Social capital' can never be used as collateral and it is not even owned. These important issues are masked by the broadened notion of 'capital'. Given the conceptual problems involved, economists and sociologists should consider returning to the pre-Smithian and surviving business usage of the term.
Article On Value Of Money
Source: https://www.researchgate.net/publication/314415825_The_Time-Value_of_Money_and_the_Money-Value_of_Time_Duration_Roundaboutness_Productivity_and_Time-Preference_in_Finance_and_Economics
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