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It is really simpler than it seems. Money is a commodity that is bought and sold. Interest is the price."
True, but to an economist "Capital" is more than just money, it is "any asset that is available for use in the production of other assets." According to Böhm-Bawerk
all of these assets; land, equipment, intellectual property, labor, capital goods, and more, "earn interest" or "pay dividends" when handled by an entrepreneur -- defined as one who takes the factors of production and turns them into capital Böhm-Bawerk was especially interested in showing how entrepreneurship was beneficial because an entrepreneur is able to expand the
scope of what constitutes "capital" through his own creative enterprise. In other words, there was something inherently "subjective" in the nature of capital itself because capital was a thing of value, and for everyone in the "Austrian School of Economics" -- Böhm-Bawerk may have been their greatest exponent -- value was subjective in nature, an idea still drives many present-day economists mad.
I'll stop the lecture right here. Sorry if sounded pedantic. I became a big fan of Austrian Economics after discovering the so-called
"Socialist Calculation Debate" in which several Austrian economists;
Ludwig von Mises and
Friedrich Hayek among them, put forth very convincing arguments, beginning in 1920, that a Socialist system simply could not survive because destroying private property meant destroying the means of exchange which made pricing systems so inefficient as to be unworkable. One of the greatest insights I ever read was Hayek's "prices are not merely 'rates of exchange between goods', but rather 'a mechanism for communicating information'." He showed quite convincingly in my opinion, that price systems evolve spontaneously with economic actors never being able to understand the consequences of their actions, whether these actors are economic agents or economic planners.
Socialism wouldn't work because it could not possibly work.
I thought it was a thing of beauty when I first learned it and I still do so today. Hayek put his theory together between 1935-1945 and history proved him right. He died a little over a year after the Soviet Union collapsed, thus knowing that he had won one of the biggest theoretical debates in economic history.
You'd then no doubt be aware of (and interested in) Dr. Kurt Richenbacher who has such informative newsletters. His material is very informative.
True, but to an economist "Capital" is more than just money, it is "any asset that is available for use in the production of other assets." Because of the comment below I zeroed in on money rather than capital.
...if more investment capital is placed in the hands of private entrepreneurs that there will be more growth.
That seems to be talking about money, in my mind.
....value was subjective in nature....
Yes, beauty is in the eyes of the beholder but the market sets prices and money is the medium we use for bartering. There is intrinsic value, which is subjective, and market value which is reflected in price. Market wise, the value of anything is dependent upon what someone will pay for it.