How Can We Move Forward from Here?

     

This exchange of ideas has developed a remarkable degree of consensus. It seems that all or most contributors agree that capital is essentially a value concept. There is also assent with Ludwig Mises that terms like capital goods are misleading. His alternative suggestion of production goods is valuable.

But together we have a huge uphill task. Elsewhere I document some of the varied and even absurd use of the term capital:

(For the references see my Conceptualizing Capitalism book and an allied article [Hodgson 2014, 2015a].)

Given this burgeoning literature and so many different manifestations, one would have difficulty identifying what enduring entity is not some variety of capital. Capital has now acquired the broad meaning of a stock or reserve of anything of social or economic significance. Everything has become capital.

With capital long divested of its monetary associations, economists have made it respectable to describe any unconsumed productive resource as "capital." Now sociologists can earn academic reputations by discovering new forms of "capital." These endless terminological inventions add little to our understanding of the phenomena.

Those who follow the argument of Fetter and others are in the awkward position of agreeing with the widespread monetary-accounting view of capital, as used outside the academy, but disagreeing with the reckless proliferation of capital concepts as found in academic economics and sociology.

Can we reverse the absurd proliferation of the c-word in the academy? Not easily. It has become deeply rooted in economics since Adam Smith. But I do suggest that we keep plugging away with the more adequate monetary-accounting meaning.

Any major change in terminological usage will become more likely with the growing power of an alternative paradigm in economics and social science. The reigning paradigm in economics is based on a physicalist view of economic activity, with a concept of property based on mere possession rather than on legal rights. (Hodgson 2015a, 2015b) An alternative view of the economy would see it as a processor of information and knowledge, as Austrians such as Friedrich Hayek and others such as Thorstein Veblen emphasized. Its central metaphor would not be a machine but a living, evolving system, containing and conveying information like an organism's DNA.