Capital in Disequilibrium: The Role of Capital in a Changing World

Considerations involving capital are as old as economics itself. And, perhaps more than any other field in economics, current capital theory bears the stamp of its history. Modern discussions are very heavily influenced by the categories developed by capital theorists since Adam Smith, and by the contexts in which they wrote. The history of capital theory is a history of complex, often esoteric, intellectual battles. And more often than not, these theoretical debates about abstruse technical issues mask the underlying ideological differences that are the real issues. But there is one thing that many of the protagonists have in common: their adherence to a framework in which equilibrium, in some significant sense, prevails. In this chapter we shall examine some aspects of the various approaches to capital that have characterized the history of capital theory. In doing so we shall seek (a) to clarify the significance, or lack thereof, of the insights gained from the high points in the development of capital theory, (b) to remove the ambiguity that has surrounded key terms like “profit,” “rent,” and “interest,” and (c) to clear the way for a consideration of capital in situations of disequilibrium where, it will be seen, many of the traditional issues are rendered moot.

Market economies are sometimes referred to as “capitalist” economies, suggesting the presence of a phenomenon called “capital” that is in some way responsible for the character of the economy and for its mode of production in particular. At a general level we may want to say that capital is “that which makes

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