October, 2015

The Capital-Using Economy

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Capital theory is fundamental to everything else in Austrian economics. It lies at its core, implicit in discussions of monetary policy, the business cycle, the entrepreneur, and the subjectivity of value and expectations. Prior to the Keynesian revolution, it was capital theory for which the Austrian school was most known among mainstream economists. With the advent of Keynesian macroeconomics, interest in capital theory all but disappeared. But it has recently been the subject of increasing attention. After a brief overview of the main ideas in Austrian capital theory (ACT) from its origins and extensions through the middle of the last century, this chapter notes this rekindled interest and surveys recent applications, including its connection to complexity studies, management studies, entrepreneurship, and macroeconomic policy.

The Oxford Handbook of Austrian Economics is available though Oxford University Press.