A capital good, it is commonly said (and I have said it myself), is one that 'can be used in any way to satisfy wants in subsequent periods'. 1 It is not ruled out, on this definition, that the same good may be both capital good and consumption good. The domestic car is usable this week, and will continue (one hopes) to be usable in subsequent weeks; it satisfies present wants and future wants jointly. The same is true of consumer capital goods generally. But it is not only the durable goods which are at present in the possession of the consumer which have this property of present-future jointness. For the same is true of the car that is hired, or rented, even one that is only rented for a particular occasion. It still serves, or is intended to serve, both present and future wants; but the present and the future wants are wants of different people.
Thus if one is thinking in terms of ownership, the capital good-consumption good line is drawn in one place; but if one is thinking in terms of want-satisfaction, it is drawn in another. Houses, of course, are the prime example of a good which may be owned outright by the current user, or may be rented. In some states of society, most houses are rented; in others, most are owned outright. But unless we are specially interested in questions of home ownership, we are usually prepared to reckon all houses as consumers' capital goods, because they satisfy (directly) both present and future wants. We may nevertheless be willing to take as our standard case that in which all houses are rented—reckoning the home owner as paying an 'imputed rent' to himself.
It remains the case, if we take the latter view, that the fundamental distinction among capital goods is between those which satisfy present and future wants jointly, and those which derive the whole of their value from the contribution which they are expected to make to the satisfaction of future wants. As has just been shown, this is not the same as the distinction in terms of
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Publication information: Book title: Capital and Time: A Neo-Austrian Theory. Contributors: J. R. Hicks - Author. Publisher: Clarendon. Place of publication: Oxford, England. Publication year: 1987. Page number: 3.
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