KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
No 275:
Time and Capital in Dynamic and Spatial Economic Theory
Åke E. Andersson
Abstract: One of the claims of this paper is that three
Austro-Swedish schools of economics provided much of the foundations for
almost all of economic analysis developed after the second world war.
Important representatives of the first school are Böhm-Bawerk and Wicksell,
Schumpeter and Hayek of the second school, and Cassel, Wald and von Neumann
of the third Austro-Swedish school of economics. However, there are serious
omissions in all the three approaches to economic theory. The most striking
is the lack of an analysis of the role of non-material and material public
capital (or infrastructure) in the growth and development of economies. In
this paper I demonstrate the theoretical approaches necessary for an
extension of economic dynamics to develop the theories and models of these
schools of economics. In this paper I furthermore show that a proper
refocusing on the time dimension can also shed light on the dynamics of
economies in space. Three approaches are necessary for such a synthesis.
1.Subdivision of products and systems of production according to their
different and always positive durability, implying that everything produced
is capital. 2.Subdivision of products according to the time used in their
production. 3.Subdivision into private and public goods, allowing for
non-linearity. 4.Allowing for differences in time scales of economic
processes. With these distinctions it can be shown that the economic
development in time and space is determined by the impact of economies of
scale, duration of the production process, durability of products and the -
relative to most other kinds of capital - much slower growth of public
capital (i.e. material and non-material infrastructure).
Keywords: Public capital; time scale; economic theory; Austro Swedish schools; (follow links to similar papers)
JEL-Codes: B13; B23; C62; D21; E10; E22; E58; F10; F12; H41; L23; N01; O40; R12; (follow links to similar papers)
29 pages, May 7, 2012
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