Expectations and the Meaning of Institutions: Essays in Economics

By Don Lavoie; Ludwig Lachmann | Go to book overview

6

ON THE MEASUREMENT OF CAPITAL [1941]

INTRODUCTION

Few economists will deny that in recent years the rapid rapprochement between theoretical and empirical economics has been one of the most encouraging features of the evolution of their science. The remarkable progress which the investigation of problems connected with the analysis and measurement of national income has achieved gave convincing proof, if such was needed, that co-operation between theorists and statisticians is capable of giving rise to a clarification of concepts as well as to fuller understanding and more exhaustive utilization of available statistical data. Nevertheless, as has often been pointed out, it is a necessary condition of this co-operation not only that theorists present their theses in a verifiable form, but also that econometricians be aware of the economic nature of the processes underlying the phenomena which they are measuring.

To the present day most economic theory has evolved along static lines. The adaptation of its theorems to a dynamic world, as witness the problem of expectations, has proved a more than formidable task. But in no field of economics is the need for a break with the static tradition and for a new and dynamic approach more imperative than in the theory of capital. As Professor Hayek has shown, a world without, or with only generally foreseen, change is not at all a 'capitalistic' world, as in it none of the problems, the solution of which is the typical function of the capital-owner, would present themselves. It was therefore only to be expected that contributions to the econometrics of capital which do not keep abreast of the present level of knowledge of dynamic

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