The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Circulating Capital

  • Mark Blaug
Reference work entry


This article summarizes the history of the distinction between circulating capital (whose full value returns to the capitalist from the sale of final goods) and fixed capital (whose value is never fully recovered in one production cycle) from its introduction by Smith and development by Ricardo to its treatment by Marx and the Austrian capital theorists. It gave rise to the wages fund doctrine, the problem of joint production, and the issue of the optimum rate of depreciation and replacement of old equipment.


Advances Austrian capital theory Böhm-Bawerk, E. von Capital theory Circulating capital Constant and variable capital Depreciation Fixed capital Frisch, R. A. K. Joint production Marginal revolution Marx, K. H. Mill, J. S. Quesnay, F. Ricardo, D. Smith, A. Turgot, A. R. J. Wages fund Wicksell, J. G. K. 

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  1. Blaug, M. 1985. Economic theory in retrospect. 4th ed. Cambridge: Cambridge University Press.Google Scholar
  2. Steedman, I. 1977. Marx after Sraffa. London: New Left Books.Google Scholar

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Mark Blaug
    • 1
  1. 1.