Capital Accumulation and Economic Crises

In the first section of this chapter we will examine how some of the most renowned economists of the past have explained capital. Undoubtedly, capital is one of the central concepts of economics and yet there is still no consensus among economists on how to define it. The questions raised by Smith (1776/1991) concerning the logical relationship between capital and saving, and between circulating and fixed capital, are no longer on the agenda, and yet they have never been satisfactorily answered. This is even more so with regard to the relationship between capital and economic value. Well-known economists of the past such as Ricardo, Marx, Walras, Böhm-Bawerk, and Keynes have addressed this question and, with the notable exception of Walras, have reached the conclusion that capital cannot be considered as a direct source of economic value. However, none of them denies the impact capital has on prices, and it is since Ricardo’s (1817/1951) Principles that economists are aware that a satisfactory theory of value must account for the presence of capital. In particular, both Ricardo and Böhm-Bawerk (1889/1959) emphasize the role played by time in enabling capital to be an indirect source of economic value. Keynes’s analysis of capital is another important contribution to a correct understanding of this concept and encapsulates all the deepest insights of his predecessors concerning the role of saving and time. By introducing these elements into a theoretical framework where the presence of money and banks is essential, Keynes opens the way to the modern macroeconomic analysis of capital and to Schmitt’s (1984a) quantum macroeconomic approach.