Vent for Surplus, the Subsistence Fund, and the Evolution of Money

Hla Myint’s 1970 paper contains in its conclusion the important point that the “implicit identification of capital with durable capital goods and complex machinery requires to be seriously qualified when applied to the underdeveloped countries. In the economic setting of these countries the older classical notion of capital as a ‘subsistence fund’ to support labor engaged in producing future output still retains great importance”. Many years earlier, Myint had also observed that “… in Smith’s time, fixed or durable capital played only a very small part in economic life and the bulk of investment was in the form of circulating capital or ‘advances to labour’”1.