Unless I’m mistaken, wasn’t Hayek’s Pure Theory of Capital originally supposed to be part of a much larger work on capital theory? Since Pure Theory was published, have any Austrian economists yet produced a definitive work on Austrian capital theory similar to that which Hayek envisioned?
Not that I know of. I’m in the middle of PTOC right now, and it’s extremely complicated and esoteric. Professional economists really have no interest in capital theory. It’s (a) too complicated to be worthwhile, and (b) considered a settled topic. Here’s an interesting fact: Samuelson was obsessed with capital theory, and towards the end of his career he seemed to move towards the Austrian position, and even claimed that his teacher, Schumpeter, held the wrong position during the socialist calculation debates.
I recommend Bohm-Bawerk and Strigl in capital theory. Hayek has always seemed kind of weird - too British is how I would describe it, though that really means nothing. I just think British philosophy, epistemology and economics influenced him in a lot of backwards ways as compared to the continental Austrians.
The Positive Theory of Capital is an extremely lucid presentation of capital theory, based entirely on logic and pure reason. Unfortunately, there are serious theoretical problems with the Bohm-Bawerkain frame work, and it doesn’t adequately describe real world phenomena.
The OP should check out Ludwig Lachmann’s Capital and Its Structure.
Indeed. According to Robert Murphy, Hayek wrote what is now called Pure Theory only covering the capital theory of a barter economy. He was supposed to come back and extend the analysis to a money economy, but never did.
Thank you for your responses. Have read Lachman and Strigl. I own B-B but haven’t got round to reading it yet.
Unfortunately, there are serious theoretical problems with the Bohm-Bawerkain frame work, and it doesn’t adequately describe real world phenomena.
Agreed, but it is an excellent read to understand historical capital theory and to understand why some explanations do not work. It also clearly describes what a capital theory actually has to explain.
Ok, that Samuelson fact IS really interesting. Do you remember where you read/heard that? I was aware that he was quite familiar with Austrian capital theory (since It pops up in his famous “A Summing Up”, article on the Cambridge Capital Controversies) but I never knew that he started moving more towards the Austrian capital position later in life. Really interesting if true.
Actually, I am in the process of finishing up my undergrad honours thesis on Austrian capital theory (should be done by next week, aaaaah!), so in the past year or so I’ve read a bunch of the major works of Austrian capital theory. And yeah, the most detailed treatment of the period of production capital model I have come across is found in Hayek’s Pure Theory of Capital. Capital and Its Structure is really good too, as other folks have already said. There’s a couple of minor works out there that are interesting to read as well; Kirzner’s Essay on Capital , and Lewin’s Capital in Disequilibrium, and Skousen’s Structure of Production (I found the the history of Austrian capital theory contained in this work to be really interesting; his aggregate supply/demand vectors section… not so much). However, none of these works come even close to the complexity of Pure Theory.
By the way, Esuric, if you (or anyone else, for that matter) are working through Pure Theory, I would really recommend reading Hayek’s article “On The Relationship Between Investment and Output” (Economic Journal, 1934) as well. I think he does a better job explaining his wacky 3d diagrams here than he does in Pure Theory. Also, he briefly discusses some of the mathematics behind these diagrams, which I found to be quite helpful.