“Hayek’s essential gist in capital theory was that capital is heterogeneous, that it cannot be put to many uses simultaneously or at different times. If these empirical assumptions as to capital’s heterogeneity are false, then his theoretical system of economic activity falls. Hayek never established that changes in interest rates primarily and predominantly influence capital production of goods of higher order and their prices.”

— Alan O. Ebenstein

Hayek's Journey: The Mind of Friedrich Hayek (2003)

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Alan O. Ebenstein 47

American political scientist, educator and author 1959

Alan O. Ebenstein (1959) American political scientist, educator and author

Hayek's Journey: The Mind of Friedrich Hayek (2003)

“When Keynes’s General Theory was published in February 1936, it obliterated all else on the scene in academic economics. Hayek was known to be working on a treatise on capital as Keynes’s work was published (the work that became The Pure Theory of Capital). While there was some anticipation in academia for this forthcoming major work, interest even by economists in Hayek’s work waned.”

Alan O. Ebenstein (1959) American political scientist, educator and author

Hayek's Journey: The Mind of Friedrich Hayek (2003)

“In the years after 1936, whilst Hayek was working on The Pure Theory of Capital, most economists were convinced by Keynes, whose theory had an elegance and simplicity that Hayek’s did not. Keynes’ theory lacked Hayek’s theoretical rigor in that it was not based on equilibrium (on individual rationality), and there were places in the argument where Keynes relied on loose, informal arguments, preferring to put his trust in intuition rather than formal theory. Keynesians did not solve the problems with capital theory that Hayek had identified: they just bypassed or ignored them. According to Hayek’s methodological criteria, Keynes’ theory was decidedly inferior. Against this, Keynes’ theory provided opportunities for mathematical and statistical analysis that Hayek’s did not. Indeed, though Hayek paid some attention to data, he did so only minimally: he certainly made no attempt to test his theory against statistical data. The choice of Keynesian theory was, at least in part, a methodological one.”

Roger Backhouse (economist) (1951) British economist

"Hayek on money and the business cycle", 2006

“As the title of his 1941 book indicates, the theory of capital lay at the heart of his theory of the cycle. The reason is that he attributes the cycle not to changes in aggregate demand, or even to changes in the quantity of capital, but to changes in the structure of production and hence the structure of the capital stock. In this, his theory was highly unusual: one of the reasons for his failure to engage more effectively with Keynes was the latter’s inability to see how the theory of capital could be of any importance for the cycle. Because the theory of capital is so central, and because it is so complex, it needs to be explained carefully. After that, the rest of his theory falls into place comparatively easily.”

Roger Backhouse (economist) (1951) British economist

"Hayek on money and the business cycle", 2006

“But simultaneously with the development of capitalist production the credit system also develops. The money-capital which the capitalist cannot as yet employ in his own business is employed by others, who pay him interest for its use.”

Karl Marx (1818–1883) German philosopher, economist, sociologist, journalist and revolutionary socialist

Vol. II, Ch. XVII, p. 325.
(Buch II) (1893)

“Although it is obvious that people acquire useful skills and knowledge, it is not obvious that these skills and knowledge are a form of capital, that this capital is in substantial part a product of deliberate investment, that it has grown in Western societies at a much faster rate than conventional (nonhuman) capital, and that this growth may well be the most distinctive feature of the economic system.”

Theodore Schultz (1902–1998) American economist

Source: "Investment in human capital," 1961, p. 1

“Perfect competition must hold in product and factor markets, and also (and importantly) in capital markets. The assumption has two essential features: economic agents must be price takers; and they must have equal power.”

Nicholas Barr (1943) British economist

Source: Economics Of The Welfare State (Fourth Edition), Chapter 4, State Intervention, p. 73

“Reification, the essential tendency of capitalism, can never be wholly realized. If it were, if the system were actually able to change individuals into things moved only by economic “forces,” it would collapse not in the long run, but immediately. The struggle of people against reification is, just as much as the tendency towards reification, the condition for the functioning of capitalism. Capitalism can function only by continually drawing upon the genuinely human activity of those subject to it, while at the same time trying to level and dehumanize them as much as possible.”

Cornelius Castoriadis (1922–1997) Greek-French philosopher

Source: The Imaginary Institution of Society (1975), p. 16.

“Generally speaking, under capitalism, the ownership of capital is separate from the application of capital to production; money capital is separate from industrial or productive capital; the rentier, living entirely on income obtained from money capital, is separated from the entrepreneur and from all those directly concerned in the management of capital.”

Vladimir Lenin (1870–1924) Russian politician, led the October Revolution

Source: Imperialism, The Highest Stage of Capitalism (1917), Chapter Three

“Capitalism should not be condemned, since we haven’t had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!”

Ron Paul (1935) American politician and physician

Has Capitalism Failed? http://www.house.gov/paul/congrec/congrec2002/cr070902.htm (July 9, 2002).
2000s, 2001-2005

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