Capital as in capitalism, or capital as in capital goods, or both?

  • Eduard BraunEmail author


Austrian economists employ two different concepts of capital. Sometimes they treat capital as a universal phenomenon of human action as such. Capital is then understood as a combination of heterogeneous capital goods that appear on the intermediate stages of the production process. In other instances, they understand capital as a homogeneous value magnitude expressed in money terms that is employed in business accounting. This paper argues that this practice not only creates terminological confusion, but leads to substantial misunderstandings when it comes to important theories held by the Austrian school. The point is exemplified by the Austrian theory of the business cycle.


Capital Capitalism Capital goods Austrian business cycle theory 

JEL classification

B53 D24 P12 



The author thanks Professor David Howden for helpful comments on an earlier draft of this paper. He has further profited from discussions with several participants of the 2017 conference on “Perspectives of Integrated Austrian Theory” at the Universität Hamburg, Germany.

Compliance with ethical standards

Conflict of interest

The author declares that he has no conflict of interest.

Ethical approval

This article does not contain any studies with human participants performed by any of the authors.


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Authors and Affiliations

  1. 1.Institute of Management and EconomicsClausthal University of TechnologyClausthal-ZellerfeldGermany

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