Capital and Its Structure - Lachmann
CAPITAL AND IT'S STRUCTURE - LACHMANN
The shape in which new capital goods make their appearance is determined largely by the existing pattern, in the sense that 'investment opportunities' really mean 'holes in the pattern'. pg10
Heterogeneity of Capital means heterogeneity in use;
Heterogeneity in use implies Multiple Specificity;
Multiple Specificity implies Complementarity;
Complementarity implies Capital Combinations;
Capital Combinations form the elements of the Capital Structure. pg12
The ability to turn failure into success and to benefit from the discomfiture of others is the crucial test of true entrepreneurship. A progressive economy is not an economy in which no capital is ever lost,
but an economy which can afford to lose capital because the productive opportunities revealed by the loss are vigorously exploited.
significant change in needs or resources expresses itself in a price change, and every price change is a signal to consumers and producers to modify their conduct. Thus people gain knowledge about each other by closely following market prices.
action based on price messages conveying misleading information is, as we shall see in Chapter VII, often an important factor in the Trade Cycle. For our present purpose it is sufficient to realize:
First, that in a world of continuous change prices are no longer in all circumstances a safe guide to action; Second, that nevertheless even here price changes do transmit information, though now incomplete information; Third, that such information therefore requires interpretation (the messages have to be 'decoded') in order to be transformed into knowledge, and all such knowledge is bound to be imperfect knowledge.
PAGES 28-29
We conclude that the accumulation of capital renders possible a higher degree of the division of capital; that capital specialization as a rule takes the form of an increasing number of processing stages and a change in the composition of the raw material flow as well as of the capital combinations at
each stage; that the changing pattern of this composition permits the use of new indivisible resources; that these indivisibilities account for increasing returns to capital; and that these increasing returns to the use of capital are, in essence, the 'higher productivity of roundabout methods of production'.
The shape in which new capital goods make their appearance is determined largely by the existing pattern, in the sense that 'investment opportunities' really mean 'holes in the pattern'. pg10
Heterogeneity of Capital means heterogeneity in use;
Heterogeneity in use implies Multiple Specificity;
Multiple Specificity implies Complementarity;
Complementarity implies Capital Combinations;
Capital Combinations form the elements of the Capital Structure. pg12
The ability to turn failure into success and to benefit from the discomfiture of others is the crucial test of true entrepreneurship. A progressive economy is not an economy in which no capital is ever lost,
but an economy which can afford to lose capital because the productive opportunities revealed by the loss are vigorously exploited.
significant change in needs or resources expresses itself in a price change, and every price change is a signal to consumers and producers to modify their conduct. Thus people gain knowledge about each other by closely following market prices.
action based on price messages conveying misleading information is, as we shall see in Chapter VII, often an important factor in the Trade Cycle. For our present purpose it is sufficient to realize:
First, that in a world of continuous change prices are no longer in all circumstances a safe guide to action; Second, that nevertheless even here price changes do transmit information, though now incomplete information; Third, that such information therefore requires interpretation (the messages have to be 'decoded') in order to be transformed into knowledge, and all such knowledge is bound to be imperfect knowledge.
PAGES 28-29
We conclude that the accumulation of capital renders possible a higher degree of the division of capital; that capital specialization as a rule takes the form of an increasing number of processing stages and a change in the composition of the raw material flow as well as of the capital combinations at
each stage; that the changing pattern of this composition permits the use of new indivisible resources; that these indivisibilities account for increasing returns to capital; and that these increasing returns to the use of capital are, in essence, the 'higher productivity of roundabout methods of production'.