Abstract
The “dotcom boom” and subsequent collapse raises issues as to the nature of capital and the relationship between capital and investment. Capital in conventional finance, based on the Fisher-Hirshleifer analysis, is defined as postponed consumption and investment is defined as a trade-off between consumption now and in the future. This paper argues that a more satisfactory explanation of the relationship between investment and capital was developed by the Austrian economist Böhm-Bawerk, who identified capital goods as separate from consumption goods, and where the passage of time is fundamental to the accumulation of capital. Such a process assumes risk rather than uncertainty, and does not capture the essence of Schumpeterian investment.
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Stewart, J. (2005). Capital in the new economy: A Schumpeterian perspective. In: Cantner, U., Dinopoulos, E., Lanzillotti, R.F. (eds) Entrepreneurships, the New Economy and Public Policy. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-26994-0_10
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DOI: https://doi.org/10.1007/3-540-26994-0_10
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