Capital Theory Paradoxes: Anything Goes

Abstract

A first approximation to the study of the intertemporal aspects of resource allocation (capital theory from now on), consists of concentrating on the steady states (the rest points) of associated dynamical systems. Provided one does not lose sight from the fact that this is not an end in itself, there is much useful information to be gleaned from steady-state analysis — indeed, one of the prime tools of economics. No doubt, the pervasiveness of the notion of the stationary state in classical economics and the fact that there is so much one can do without invoking powerful mathematics, have also added to its popularity.