Machines

Abstract

We have discussed the classical problems of capital theory by means of a model in which only circulating capital existed. This was consistent with the spirit of classical, Marxian and Austrian capital theory. All these schools were aware of the fact that capital to a large extent consisted of buildings, machines etc. which they called fixed capital. But their theoretical line of thought emphasized that the labour inputs are required before the final outputs become available, an idea which unambiguously is only true for models in which only circulating capital exists. It is the distinctive feature of fixed capital like machines that they are used together with labour inputs over a stretch of time. This has the consequence that final outputs become available before certain labour inputs associated with this same machine are required. We therefore have to consider the complications caused by the partial reversal of the time sequence of labour inputs and final outputs.