I was interested in the Austrian take on the Cobb Douglas production model and came across Shostak’s article: http://mises.org/daily/1658
“There is, however, no such thing as a change in technology whilst the stock of capital remains unchanged. The implementation of a new idea can only be made possible through the alteration of the capital stock. For instance, with a simple stick John can pick up 10 apples per hour from an apple tree. An innovative idea, which is translated by introducing a special attachment to the stick, can now double the hourly output of apples.”
Wouldn’t a change in government regulation (legislation weakening property rights, an increase in trade barriers, restrictions on business activity, etc.) affect the technology factor (AKA total factor productivity right?) without affecting the capital stock?
No, any government action that does not appear to directly affect the capital stock will/does affect the capital stock. First the legislative process and the enforcement mechanism drain the capital stock. Second, assuming the legislative and enforcement effects are minor(The enforcement mechanism certainly is not), entrepreneurs will in expectation of the legislation and enforcement mechanism begin to change the capital stock to fit the new environment.