The Pure Theory of Capital
By F. A. Hayek
Edited by Lawrence H. White
Routledge – 2007 – 444 pages
F. A. Hayek’s long-overlooked volume, was his most detailed work in economic theory. Originally published in 1941 when fashionable economic thought had shifted to John Maynard Keynes, Hayek’s manifesto of capital theory is now available again for today’s students and economists to discover.
With a new introduction by Hayek expert Lawrence H. White, who firmly situates the book not only in historical and theoretical context but within Hayek’s own life and his struggle to complete the manuscript, this edition commemorates the celebrated scholar’s last major work in economics. Offering a detailed account of the equilibrium relationships between inputs and outputs in an economy, Hayek’s stated objective was to make capital theory "useful for the analysis of the monetary phenomena of the real world.” His ambitious goal was nothing less than to develop a capital theory that could be fully integrated into the business cycle theory.
Part 1: Introductoion 1. The Scope of the Inquiry 2. Equilibrium Analysis and the Capital Problem 3. The Significance of Analysis in Real Terms 4. The Relation of this Study to the Current Theories of Capital 5. The Nature of the Capital Problem 6. The Duration of the Process of Production and the Durability of Goods: Some Definitions 7. Capital and the ‘Subsistence Fund’ Part 2: Investment in a Simple Economy 8. The Output Function and the Input Function 9. The Continuous Process of Production 10. The Position of Durable Goods in the Investment Structure 11. The Productivity of Investment 12. Planning for a Constant Output Stream 13. Compound Interest and the Instantaneous Rate of Interest 14. The Marginal Productivity of Investment and the Rate of Interest 15. Input, Output, and the Stock of Capital in Value Terms 16. The Marginal Value Product of Investment: The Problem of Attribution (Imputation) 17. Time Preference and its Effects with Constant Returns on Investment 18. The Preference and Productivity: Their Relative Importance Part 3: Capitalistic Production in a Competitive Community 19. The General Conditions of Equilibrium 20. The Accumulation of Capital 21. The Effect of the Accumulation of Capital on the Quantities Produced and on Relative Prices of Different Commodities 22. The Adjustment of the Capital Structure to Foreseen Changes 23. The Effects of Unforeseen Changes and in Particular of Inventions 24. The Mobility of Capital 25. ‘Saving’, ‘Investment’ and the ‘Consumption of Capital’ Part 4: The Rate of Interest in a Money Economy 26. Factors Affecting the Rate of Interest in the Short Run 27. Long-run Forces Affecting the Rate of Interest 28. Differences between Interest Rates: Conclusions and Outlook