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Is Boulder Dam "capital"?

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Ron Peterson

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Dec 6, 2000, 3:00:00 AM12/6/00
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Mike Coburn (michael....@gte.net) wrote:
> For several months now I have been messing around
> with the definition of "capital". One reason for that was
> was to try and find out how other people defined the word
> and why they felt their definition to be valid. I have
> always attempted to distinguish "capital" as something that
> was owned by individuals. And I think that I still want
> to do that. But if everyone else insists that I am wrong
> then I am just wrong. That will mean that I must find a
> new word and define it in context all the time.

> So is Boulder Dam "capital" or infrastructure and
> I am also leaning on the idea that "infrastructure" is
> community owned.

Boulder Dam is capital, an asset, and part of the infrastructure and
it makes no difference if it is owned by federal, state, local government,
corporation, or an individual.

Ron


Mike Coburn

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Dec 6, 2000, 8:26:06 PM12/6/00
to
For several months now I have been messing around
with the definition of "capital". One reason for that was
was to try and find out how other people defined the word
and why they felt their definition to be valid. I have
always attempted to distinguish "capital" as something that
was owned by individuals. And I think that I still want
to do that. But if everyone else insists that I am wrong
then I am just wrong. That will mean that I must find a
new word and define it in context all the time.

So is Boulder Dam "capital" or infrastructure and
I am also leaning on the idea that "infrastructure" is
community owned.

Are these distinctions correct or not?

--

Coburn ---
The opinions expressed herein above are mine. They are my property
so you can't have them. But use them. No rent or interest due.

Mark Patrick Witte

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Dec 6, 2000, 11:23:46 PM12/6/00
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In article <3a2f0586$0$78098$272e...@news.execpc.com>,
Ron Peterson <ro...@earth.execpc.com> wrote:

>Mike Coburn (michael....@gte.net) wrote:
>> For several months now I have been messing around
>> with the definition of "capital". One reason for that was
>> was to try and find out how other people defined the word
>> and why they felt their definition to be valid. I have
>> always attempted to distinguish "capital" as something that
>> was owned by individuals. And I think that I still want
>> to do that. But if everyone else insists that I am wrong
>> then I am just wrong. That will mean that I must find a
>> new word and define it in context all the time.
>
>> So is Boulder Dam "capital" or infrastructure and
>> I am also leaning on the idea that "infrastructure" is
>> community owned.
>
>Boulder Dam is capital, an asset, and part of the infrastructure and
>it makes no difference if it is owned by federal, state, local government,
>corporation, or an individual.

Word! Capital is generally taken in economics to be a factor of
production that lasts over time, that is not used up in the act of producing
other goods. As such, a steel furnace would be capital, but the coal to
fire that furnace to make the steel would not be a capital good. Experience
and learning of workers are often treated as capital goods as well. The
owner ship of capital does not come in to the question of what is or is not
a capital good.

Infrastructure is generally treated in economics as a capital good
that has general applicability across productive activities, generally with
some public good aspect.

Robert Vienneau

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Dec 7, 2000, 3:00:00 AM12/7/00
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In article <90n3ci$7ma$1...@news.acns.nwu.edu>, mwi...@merle.acns.nwu.edu
(Mark Patrick Witte) wrote:

> Word! Capital is generally taken in economics to be a factor of
> production that lasts over time, that is not used up in the act of
> producing
> other goods. As such, a steel furnace would be capital, but the coal to
> fire that furnace to make the steel would not be a capital good.

The above is more a definition of "fixed capital." Many economists
would also count "circulating capital", such as goods in process
or in inventory, as capital. Since the coal would have to be
purchased beforehand, "the coal to fire that furnace" could,
indeed, be considered a capital good. In fact, a number of
approaches to capital theory are often first set out, for simplicity,
in terms of circulating capital goods alone.

Using the jargon "factor of production" to describe capital is also
debated. Marxists think of capital as a social relation, the
embodiment of the coercive power of the capitalist acting on
laborers. This coercive power is what compells the workforce to
produce more than enough to replace the capital goods used up in
production and the commodities on which they spend their wages.
This surplus is an immense accumulation of commodities. As such,
it matters whether capital goods are generally privately owned
or not. A government-owned dam probably should be regarded as
capital in a predominantly capitalist society.

Institutionalists following Veblen emphasize the general
know-how distributed across a community and embodied in
habits, customs, and organizations. Mark Patrick Witte mentions
the belated treatment of this aspect of capital among neoclassical
economists.

--
Try http://csf.colorado.edu/pkt/pktauthors/Vienneau.Robert/Bukharin.html
r c
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau

Mike Coburn

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Dec 7, 2000, 3:00:00 AM12/7/00
to

I do appreciate your take on distiguishing "infrastructure" as general
purpose or mutipurpose "capital". I would certainly not disagree.
But why, in the writing above, is the word "good" attached
to the word "capital" in several instances? How could there by a
"capital" that was not a "good"?

Mike Coburn

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Dec 7, 2000, 3:00:00 AM12/7/00
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Ron Peterson wrote:
>
> Mike Coburn (michael....@gte.net) wrote:
> > For several months now I have been messing around
> > with the definition of "capital". One reason for that was
> > was to try and find out how other people defined the word
> > and why they felt their definition to be valid. I have
> > always attempted to distinguish "capital" as something that
> > was owned by individuals. And I think that I still want
> > to do that. But if everyone else insists that I am wrong
> > then I am just wrong. That will mean that I must find a
> > new word and define it in context all the time.
>
> > So is Boulder Dam "capital" or infrastructure and
> > I am also leaning on the idea that "infrastructure" is
> > community owned.
>
> Boulder Dam is capital, an asset, and part of the infrastructure and
> it makes no difference if it is owned by federal, state, local government,
> corporation, or an individual.
>
> Ron


Thanx

Mike Coburn

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Dec 7, 2000, 3:00:00 AM12/7/00
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Robert Vienneau wrote:
>
> In article <90n3ci$7ma$1...@news.acns.nwu.edu>, mwi...@merle.acns.nwu.edu
> (Mark Patrick Witte) wrote:
>
> > Word! Capital is generally taken in economics to be a factor of
> > production that lasts over time, that is not used up in the act of
> > producing
> > other goods. As such, a steel furnace would be capital, but the coal to
> > fire that furnace to make the steel would not be a capital good.
>
> The above is more a definition of "fixed capital." Many economists
> would also count "circulating capital", such as goods in process
> or in inventory, as capital. Since the coal would have to be
> purchased beforehand, "the coal to fire that furnace" could,
> indeed, be considered a capital good. In fact, a number of
> approaches to capital theory are often first set out, for simplicity,
> in terms of circulating capital goods alone.

The economists that would create a phrase with the word "capital"
used to define "inventory" or "inputs" are simply destroying any
benefit to having such a word as "capital". i.e. the word simply
becomes useless. Economists that do not insist that "capital" only
describes that which is used in production and not "used up" but by
simply wearing out or being displaced by better technology are
totally missing the point of the word. And it is this lack of
appreciation for the word "capital" which necessitates my continuing
use of the word "real" as a modifier.

> Using the jargon "factor of production" to describe capital is also
> debated. Marxists think of capital as a social relation, the
> embodiment of the coercive power of the capitalist acting on
> laborers. This coercive power is what compells the workforce to
> produce more than enough to replace the capital goods used up in
> production and the commodities on which they spend their wages.

And that is how "capitalism" is painted as evil. The insistence
on "capital" being something that increases productivity is all
important in establishing "capitalism" to be _good_. Where "good"
is defined as that which in the mid to long term creates the most
benefit to man as a species.

> This surplus is an immense accumulation of commodities. As such,
> it matters whether capital goods are generally privately owned
> or not. A government-owned dam probably should be regarded as
> capital in a predominantly capitalist society.

The dam _IS_ infrastructure, which has now been defined as "capital"
that serves multiple owners and has multiple differing outputs
(I think that is what I've been seeing).



> Institutionalists following Veblen emphasize the general
> know-how distributed across a community and embodied in
> habits, customs, and organizations. Mark Patrick Witte mentions
> the belated treatment of this aspect of capital among neoclassical
> economists.

I do not see this as capital, but that is too long a discussion
and certainly not akin to inventory being called capital.

Jim Blair

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Dec 7, 2000, 3:00:00 AM12/7/00
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Mike Coburn <michael....@gte.net> wrote:

> So is Boulder Dam "capital" or infrastructure and
>I am also leaning on the idea that "infrastructure" is
>community owned.

Hi,

Capital is goods that are used to make other goods, as opposed to
goods that are consumed directly.

Since Boulder (actually Hoover) Dam makes electricity and irrigation
it is capital. It took a major investment in labor and money, and
has been paying that back for 60 some years.

>
> Are these distinctions correct or not?


Some say capital can be privately owned (capitalism), some say
it should all be owned in common. Commumism.

Maybe "infrastructure" is the government owned capital in a capitalist
society?

,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeb...@facstaff.wisc.edu) Madison Wisconsin
USA. This message was brought to you using biodegradable
binary bits, and 100% recycled bandwidth. For a good time
call: http://www.geocities.com/capitolhill/4834

Jim Blair

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Dec 7, 2000, 3:00:00 AM12/7/00
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Robert Vienneau wrote:

>> The above is more a definition of "fixed capital." Many economists
>> would also count "circulating capital", such as goods in process
>> or in inventory, as capital. Since the coal would have to be
>> purchased beforehand, "the coal to fire that furnace" could,
>> indeed, be considered a capital good. In fact, a number of
>> approaches to capital theory are often first set out, for simplicity,
>> in terms of circulating capital goods alone.

Mike Coburn <michael....@gte.net> wrote:


>The economists that would create a phrase with the word "capital"
>used to define "inventory" or "inputs" are simply destroying any
>benefit to having such a word as "capital". i.e. the word simply
>becomes useless.

Hi,

While I seldom agree with Robert V, he has a point here. Sub-divisions
of capital that make meaningful distinctions serve the purpose of
clearer communication. This concept does.


>....Economists that do not insist that "capital" only


>describes that which is used in production and not "used up" but by
>simply wearing out or being displaced by better technology are
>totally missing the point of the word.

All capital is "worn out" or "used up". It is just that some (like
that coal) is used up on a rapid time frame, while Hoover dam will
be silted up in a century or so. Not a difference of kind but of
degree.

How about introducing the idea of "capital depreciation" ;-)

>....And it is this lack of


>appreciation for the word "capital" which necessitates my continuing
>use of the word "real" as a modifier.


Appreciation of capital depreciation? But I don't know what you
mean by "real" capital? As opposed to "virtual" capital?

David Lloyd-Jones

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Dec 7, 2000, 3:00:00 AM12/7/00
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<ro...@telus.net> wrote
>
> This is a common confusion, aggregating the two entirely different
> factors of production that the classical economists called "capital"
> and "land." It would make as much sense for biologists to aggregate
> lungs and air.

> > Experience and learning of workers are often treated as capital goods as
well.
> You know you've left science behind when labor is called capital and a
> worker's ability is called capital _goods_.

Roy,

It seems to me the original disaggregation was the bit that was right off
the rails.

Why should land-labor-capital be any more Holy than
organic-metallic-gaseous? This latter would lump workers naturally together
with wheat, cattle, and other lower beings, while ores in the ground would
be part of the same category with the industrial civilization to which they
so obviously give birth. The category gaseous would encompass both the
oxygen that we breath (and which makes Bessemer steel possible) and the wise
words of managers and owners who make the whole economy able to function as
smoothly as it does.

I say this my concoction is obvious nonsense -- though it is a frequent
experience of mine to have people believe in even my wildest japes. But
accepting that it is nonsense, how is it different from the pre-18th century
land-labor-capital triptych?

-dlj.

David Lloyd-Jones

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Dec 7, 2000, 3:00:00 AM12/7/00
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"Mike Coburn" <michael....@gte.net> wrote

> Robert indicates what has been done to the word so as to destroy
> its meaning. Why am I not surprised that you would be supportive
> of such destruction. It allows you and others to totally ignore
> the difference between saving and investment.

Tell us, Oh Mike: what is the difference between saving and investment?
Storage vs. arehousing? Travel vs. movement? Or did you have in mind some
more subtle differentiation, like maybe sex vs. love?

> It allows you to
> totally ignore the difference between earned wealth and land.

This difference, Mike, being?

How does it compare with the difference between earned wealth and yachts?
Earned wealth and stock certificates? Earned wealth and healthy pigs (which
until quite recently were depreciable in Canada, even as they waxed several
percent a day)? Earned wealth and, say, a diver-friendly atoll full of
sunken Japanese ships in the Yaps? But this last, of course, is land.

Best,

-dlj.

SUSUPPLY

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Dec 7, 2000, 9:59:02 AM12/7/00
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Sci.econ's favorite Marxist mascot writes:

>Marxists think of capital as a social relation, the
>embodiment of the coercive power of the capitalist acting on
>laborers. This coercive power is what compells the workforce to
>produce more than enough to replace the capital goods used up in
>production and the commodities on which they spend their wages.

>This surplus is an immense accumulation of commodities.

Which reminds me of one of numerous unanswered questions. When Friday took
Crusoe's rowboat out to fish, and ended up losing the pole and cracking up the
boat on the rocky shoals, was he exploiting Capital when he then demanded to be
paid for his time?

Patrick

ro...@telus.net

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Dec 7, 2000, 7:30:35 PM12/7/00
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On Thu, 07 Dec 2000 01:26:06 GMT, Mike Coburn
<michael....@gte.net> wrote:

> So is Boulder Dam "capital" or infrastructure and
>I am also leaning on the idea that "infrastructure" is
>community owned.

Infrastructure can be private. Boulder Dam is capital.

-- Roy L

ro...@telus.net

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Dec 7, 2000, 7:41:05 PM12/7/00
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On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
Witte) wrote:

> Word! Capital is generally taken in economics to be a factor of
>production that lasts over time, that is not used up in the act of producing
>other goods.

This is a common confusion, aggregating the two entirely different


factors of production that the classical economists called "capital"
and "land." It would make as much sense for biologists to aggregate
lungs and air.

> Experience and learning of workers are often treated as capital goods as well.

You know you've left science behind when labor is called capital and a


worker's ability is called capital _goods_.

-- Roy L

Mike Coburn

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Dec 8, 2000, 3:00:00 AM12/8/00
to
Jim Blair wrote:
>
> Robert Vienneau wrote:
>
> >> The above is more a definition of "fixed capital." Many economists
> >> would also count "circulating capital", such as goods in process
> >> or in inventory, as capital. Since the coal would have to be
> >> purchased beforehand, "the coal to fire that furnace" could,
> >> indeed, be considered a capital good. In fact, a number of
> >> approaches to capital theory are often first set out, for simplicity,
> >> in terms of circulating capital goods alone.
>
> Mike Coburn <michael....@gte.net> wrote:
>
> >The economists that would create a phrase with the word "capital"
> >used to define "inventory" or "inputs" are simply destroying any
> >benefit to having such a word as "capital". i.e. the word simply
> >becomes useless.
>
> Hi,
>
> While I seldom agree with Robert V, he has a point here. Sub-divisions
> of capital that make meaningful distinctions serve the purpose of
> clearer communication. This concept does.

Robert indicates what has been done to the word so as to destroy


its meaning. Why am I not surprised that you would be supportive
of such destruction. It allows you and others to totally ignore

the difference between saving and investment. It allows you to


totally ignore the difference between earned wealth and land.

It must be nice to be able to ignore everything that actually
matters so that your models work and all your tables of numbers
say whatever you want. Such horseshit does not describe reality.
But that, of course, is necessary to achieving a system that is
without any real basis and which is, therefore, totally political.
And its always: "See, the numbers support my thesis, so I must be
correct".


> >....Economists that do not insist that "capital" only
> >describes that which is used in production and not "used up" but by
> >simply wearing out or being displaced by better technology are
> >totally missing the point of the word.
>
> All capital is "worn out" or "used up". It is just that some (like
> that coal) is used up on a rapid time frame, while Hoover dam will
> be silted up in a century or so. Not a difference of kind but of
> degree.

So as I've said: The word serves no purpose other than a
symbol you will throw around along with your tables so that
you can claim t be a "capitalist" instead of a monopolistic,
plutocratic, monarchist.



> How about introducing the idea of "capital depreciation" ;-)

How about the idea of a word that can be used as a base
for the word "capitalism" that would make such a system
actually provide for maximizing long term general utility.

> >....And it is this lack of
> >appreciation for the word "capital" which necessitates my continuing
> >use of the word "real" as a modifier.
>
> Appreciation of capital depreciation? But I don't know what you
> mean by "real" capital? As opposed to "virtual" capital?
>
> ,,,,,,,
> _______________ooo___(_O O_)___ooo_______________
> (_)
> jim blair (jeb...@facstaff.wisc.edu) Madison Wisconsin
> USA. This message was brought to you using biodegradable
> binary bits, and 100% recycled bandwidth. For a good time
> call: http://www.geocities.com/capitolhill/4834

I already said what I mean: Capital is a tool or mechanism
or organization or enterprise that increases productivity to
the advantage of the the human species as a whole. As such,
boulder dam is certainly capital, and a lump of coal is not.
But because of the total destruction of the term "capital"
so as to allow the continuing obfuscation on the part of
economists, and Republicans such as yourself, I will continue
to put the word "real" in front of the word capital so that
you duffasses don't get confused.

Mike Coburn

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Dec 8, 2000, 3:00:00 AM12/8/00
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ro...@telus.net wrote:
>
> On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
> Witte) wrote:
>
> > Word! Capital is generally taken in economics to be a factor of
> >production that lasts over time, that is not used up in the act of producing
> >other goods.
>
> This is a common confusion, aggregating the two entirely different
> factors of production that the classical economists called "capital"
> and "land." It would make as much sense for biologists to aggregate
> lungs and air.

It is _MUCH_ worse than that. I had though two years ago that
this was the only problem. Jim Blair's declaration that coal is
capital is evidence of the total and absolute destruction of
the word such that it no longer has any meaning whatsoever.

> > Experience and learning of workers are often treated as capital goods as well.
>
> You know you've left science behind when labor is called capital and a
> worker's ability is called capital _goods_.
>
> -- Roy L

As I said: The politicians will use the word as an adornment
for whatever they wish. It has a certain symbolic relationship
with earning and investment though the word in current economic
discussion is, apparently, not so deserving. It is thus a word
that can be employed to paint whatever you profess in a way such
a way that would make it more acceptable. If you are called to
task for it, you can simply pull any definition you want out of
the current stack and say: "See!!!!!".

Mark Patrick Witte

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Dec 8, 2000, 3:00:00 AM12/8/00
to
In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>> Word! Capital is generally taken in economics to be a factor of
>>production that lasts over time, that is not used up in the act of producing
>>other goods.
>
>This is a common confusion, aggregating the two entirely different
>factors of production that the classical economists called "capital"
>and "land." It would make as much sense for biologists to aggregate
>lungs and air.

No. Land is an example of a capital good.

>> Experience and learning of workers are often treated as capital goods as well.
>
>You know you've left science behind when labor is called capital and a
>worker's ability is called capital _goods_.

No, this is not about labor.

The worker's time is used up in producing something, yet the workers
experience and learning last on to be used again the next day in a way
similar to how the hammer the worker used one day will be there the next.

Jim Blair

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Dec 8, 2000, 8:49:11 AM12/8/00
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Mike Coburn <michael....@gte.net> wrote:

>
>Well... earned wealth is like, earned. You know, like you
>actually produced something from your own effort. Land
>simply exists. It will exist whether you labor or not.
.......
>
>If it is land it is "unearned". That be the end of it.

Hi,

Are you talking here about Holland? All of that land that they built
on after they made dikes to hold back the North Sea?

Mark Patrick Witte

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Dec 8, 2000, 12:25:05 PM12/8/00
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In article <3A300CC2...@gte.net>,
Mike Coburn <michael....@gte.net> wrote:

>Mark Patrick Witte wrote:
>> In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>> >On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>> >Witte) wrote:
>> >
>> >> Word! Capital is generally taken in economics to be a factor of
>> >>production that lasts over time, that is not used up in the act of producing
>> >>other goods.
>> >
>> >This is a common confusion, aggregating the two entirely different
>> >factors of production that the classical economists called "capital"
>> >and "land." It would make as much sense for biologists to aggregate
>> >lungs and air.
>>
>> No. Land is an example of a capital good.
>
> It is not. "capital" is something that is created by men
>and it is in the best interest of men to reward such creation.

A lot of things are created by man that are not capital. Capital
goods are generally factors of production that don't get extinguished in the
act of production. Barring the exception raised by Jim Blair, land is
generally treated as a non-produced capital good and for many of the
questions of interest in economics, it works just fine to lump it in with
normal capital goods.

>The
>more you can reward such creation the more capital you will see
>created. Land is not created by men and no matter how much you
>might try to reward the owner of land you will not gain any more
>land. You do, however, cause a distortion that leads to less capital
>creation.

How so? Given that any distortions in the price of land lead to
zero sum transfers between buyers and sellers, where is the social loss?

>> >> Experience and learning of workers are often treated as capital goods as well.
>> >
>> >You know you've left science behind when labor is called capital and a
>> >worker's ability is called capital _goods_.
>>

>> No, this is not about labor.
>>
>> The worker's time is used up in producing something, yet the workers
>> experience and learning last on to be used again the next day in a way
>> similar to how the hammer the worker used one day will be there the next.
>

> The defense for referring to human ability as capital
>is stronger because the reward to "know how", will encourage many to
>acquire it. Economics can play a part in the creation of "know how".
>But the distinction is that the hammer, like the dam, has utility
>without any specific human.

Just like arithmatic.

>All the folks that build the dam or
>made the hammer could be shot at dawn the day after the hammer or
>dam was created and the hammer or dam would still have utility.

And we could shoot all the math teachers and people would still have
a stock of math knowledge from those teachers.

>Human "know how" is a factor in wages.

Just like any capital good, since this effects the marginal product
of labor.

> Wages and capital are two totally different things.

How about if you take this up with the likes of Gary Becker and Paul
Romer?

>But I have far fewer reservations about
>"know how" as capital than I do about land being referred to as
>capital. Economic designs and manipulations can actually
>affect the amount of "know how". If you are allowed to include
>"know how" as capital and you were to design an economy that
>encouraged capital development you would still be maximizing general
>long term utility (a good thing to do). If, however, you design a
>system that encourages land ownership you will not have done anything
>that would be maximizing general long term utility. The rent from
>land ownership is a burden on the producers of the society which,
>when funneled into the hands of land owners, merely destroys aggregate
>wealth.

How is wealth destroyed by a transfer?

Factor payments to land, or to existing capital, encourage efficient
use of scarce resources.

David Lloyd-Jones

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Dec 8, 2000, 2:32:55 AM12/8/00
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"Mike Coburn" <michael....@gte.net> wrote:

> David Lloyd-Jones wrote:
> > Tell us, Oh Mike: what is the difference between saving and investment?
> > Storage vs. arehousing? Travel vs. movement? Or did you have in mind
some
> > more subtle differentiation, like maybe sex vs. love?
>
> One difference is that when you "save" you are subtracting liquidity
> or velocity out of the economy and when you invest you are adding
> liquidity or velocity in to the economy.

Like duh, Mike. Surely you've answered your own question: the one goes up
and the other goes down.

Modulo the differences. You have quantity and quality of each, which makes
four.

-dlj.


David Lloyd-Jones

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Dec 8, 2000, 3:41:15 AM12/8/00
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"Mark Patrick Witte" <mwi...@merle.acns.nwu.edu> wrote

> The worker's time is used up in producing something, yet the workers
> experience and learning last on to be used again the next day in a way
> similar to how the hammer the worker used one day will be there the next.

I believe that Walt Rostow used almost exactly this example in the early or
mid-sixties when I was breaking my back, with Guido and Guido's brother
Allenze, digging trenches for a drive-in movie's sound system in Eastern
Toronto.

It gave me greatest pleasure when, eight years later at Sans Souci, he
thought he had reservations and I *knew* I did -- having read his book at
night while I was grunting it. (No, jedescript, back off, back off, this is
not Whaztsisass in the rock pit...) Fortunately I was able to ask the
steward for four ballons of their house red while we waited, and my
carefully inflected French (which is utterly inadequate, but I steer around
my weak points) got us the banquette we had reserved.

* * *
Now, to return to the weakness in the Rostow proposition:

If you look at how the Dinka, an advanced inhumant "tribe," move through the
year, you will see that they had, until the external incursions, a well
developed civilization with an extremely well developed craftsmanship. In
the wet season, when the men and senior boys live on mats, by the cattle on
the high ground, mats of extreme regularity, durability, and tradesmanlike
skill are woven in hours.

On the lowlands, when all the men and cattle return in due course, the
houses and compounds are rebuilt -- with thatch and fencing which would make
the most skilled French or Walloon farmer think he had something to learn.

The Dinka are *not* a backward society.

They are/were non-literate, and they didn't use metals much. They were
insular, xenophobic (because they knew that they were "The People," and who
the hell was everybody else?), competent, self-confident. They're just like
us.

One possible difference: they learn like crazy. An awfully high percentage
of the advanced nations, it seems to me, are stoned out.

The Dinka today, even though being slaughtered like Australian rabbits or
Canadian seals on their own land, are now, somewhat reduced, all over the
world. On the day your spleen needs to be resected, and you find a tall,
thin, black surgeon concentrating on your gut, she is probably one of my
cousins -- and one of the escapees from the genocide.

* * *

An interlude, for an awfully funny story.

At one point one of my supervisors, when I was teaching US Constitutional
Law in Japan, told me that the richest man in China was going to come to
Tokyo, and he would like to meet the smartest people there. I was apparently
elected, one of the.

This Chinese clown took over a floor of a building just across the creek
from the school I taught at, Nichi-Bei Kaiwa Gakuin (Japan-America
Conversational Institute) to Kukusai Bunkyo Kaikyu (Center for International
Studies [slightly more advanced conversation...]).

I loved that creek. On both sides there were Police stations, and at each
side, plus at the actual site where you crawled under the barbed-wire, there
were signs saying "It Is Forbidden To Climb Here." It was, and is, one of
the most elegant climbing sites anywhere, with every degree of difficulty
obtainable just a few paces away. If you fall, you fall onto a bed of solid
gravel, so no sweat.

The guy climbing next to you -- one one-and-a-half meter Old Palace rock
away from you -- is likely to be one of the cops whose actual duty is
supposed to be stopping you from getting in there in the first place.

* * *

So anyway, the Chinese zillionnaire and I were introduced -- by his son, who
may or may not have been able to tie his shoe-laces without praeceptorial
assistance from his Hong Kong Headmaster.

Poor old fucker. He was casting about. I even spoke a fair stream of
Mandarin at the time, though of course Cantonese was their language.

The guy was on a huge blue carpet of excellent quality. He was at one end.
Sylphs were ready to deliver tea. (I had already chatted them up when I got
off the elevator.)

I took off my shoes at the door. Then I took off my slippers at the edge of
the huge carpet. What was I supposed to do next, bow down? Like gimme a
break. I spoke Japanese and they didn't; I had an operating business, and
they didn't; I knew the market, and they didn't have the first clue -- to
the point where Japanese were following me around asking me for advice about
Japan (a bit of flattery I don't take highly seriously.)

So I halted. A sort of "Uh?" moment.

The grand-old-fucker thought his son was a fool for ringing me in; I thought
the whole bunch of them were clueless thrashers.

I went across the bridge,saying "Hi," to the cops on both sides, drank seven
beers in one of my girl-friends' bars, then spent the afternoon in Nakano
with my mistress, Mie, then went home.

A good and normal afternoon -- but not a huge Leap Forward in NiWaBei,
Japanese-Chinese-American relations.

What the hell, live it.

-dlj.

David Lloyd-Jones

unread,
Dec 8, 2000, 4:29:20 AM12/8/00
to

"Mike Coburn" <michael....@gte.net>

> It is not. "capital" is something that is created by men
> and it is in the best interest of men to reward such creation.

Mike,

There have been several studies in the last two years which show that the
returns to women are radically higher than the returns to men.

Men churn, or get churned. Women say "OK, That sounds great, I''ll throw you
my spare cash between April and June of next year."

* * *

Women buy and hold stuff.

Men thrash about at the "winners."

* * *

My guess is the difference between is only the brokerage.

-dlj.

Mike Coburn

unread,
Dec 9, 2000, 12:53:50 AM12/9/00
to

Well, one of us is confused. But I'm not so sure that it is me. I fail
to see any benefit to the economy in stuffing money into a mattress.
Even an interest bearing mattress such as a government bond or a savings
account. Now if and when you want to return to the scenario where the
money that is placed in a bank is the money that is used to finance
loans then we _may_ be able to discuss the matter. We may defined at
least a tenuous link between savings as described here and some form of
investment. But even then, the "saved" accounting entries would not be
capital. Such an action (still savings) will inevitably take "money"
out of the economy. Real investments that trade liquidity for a share
in future earnings do not do that. These would be called "capital"
investments.

Mike Coburn

unread,
Dec 9, 2000, 12:56:15 AM12/9/00
to
Jim Blair wrote:
>
> Mike Coburn <michael....@gte.net> wrote:
>
> >
> >Well... earned wealth is like, earned. You know, like you
> >actually produced something from your own effort. Land
> >simply exists. It will exist whether you labor or not.
> .......
> >
> >If it is land it is "unearned". That be the end of it.
>
> Hi,
>
> Are you talking here about Holland? All of that land that they built
> on after they made dikes to hold back the North Sea?
>

Don't you ever tire of grabbing hold of the most insignificant trivial
shit you can find and waving it in the air like a banner?

Mike Coburn

unread,
Dec 9, 2000, 3:19:57 AM12/9/00
to
Mark Patrick Witte wrote:
>
> In article <3A300CC2...@gte.net>,
> Mike Coburn <michael....@gte.net> wrote:
> >Mark Patrick Witte wrote:
> >> In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
> >> >On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
> >> >Witte) wrote:
> >> >
> >> >> Word! Capital is generally taken in economics to be a factor of
> >> >>production that lasts over time, that is not used up in the act of producing
> >> >>other goods.
> >> >
> >> >This is a common confusion, aggregating the two entirely different
> >> >factors of production that the classical economists called "capital"
> >> >and "land." It would make as much sense for biologists to aggregate
> >> >lungs and air.
> >>
> >> No. Land is an example of a capital good.
> >
> > It is not. "capital" is something that is created by men
> >and it is in the best interest of men to reward such creation.
>
> A lot of things are created by man that are not capital.

But NONE of them are land.

Capital
> goods are generally factors of production that don't get extinguished in the
> act of production. Barring the exception raised by Jim Blair, land is
> generally treated as a non-produced capital good and for many of the
> questions of interest in economics, it works just fine to lump it in with
> normal capital goods.

Thank you for confirming what I have said and for using Mr. Blair as
your side kick. The inclusion of land as capital makes your models
seem to work and so, therefore, in the tradition of neo classical
econ, land must be capital. But a model that attempts to predict
capital creation will most certainly not be efficacious in regard
to land, while it will be so for buildings, and roads and dams and
factories. This would lead a normal, well adjusted human to the
conclusion that land must somehow not be capital in the same sense
as these other ingredients. That, in fact, it must be something
quite different. Like, maybe, it is just land.

> >The
> >more you can reward such creation the more capital you will see
> >created. Land is not created by men and no matter how much you
> >might try to reward the owner of land you will not gain any more
> >land. You do, however, cause a distortion that leads to less capital
> >creation.
>
> How so? Given that any distortions in the price of land lead to
> zero sum transfers between buyers and sellers, where is the social loss?

If I can use wealth appropriated from the non land owners
via income tax and sales taxes to finance the government
that enforces my land rights and to develop infrastructure
to increase the value of those rights to collect rent, then
they (the non owners) will have to work very hard indeed
to ever be able to become owners. And why, pray tell,
would I risk developing anything at all or ever changing
anything at all. Yes, the sum is zero but the nobility
gets more "noble" as the serfs get the wrench. Up there
in macro land the world may be a very nice place. But
down here in the trenches where the real stuff happens it
ain't so cut and dried.

> >> >> Experience and learning of workers are often treated as capital goods as well.
> >> >
> >> >You know you've left science behind when labor is called capital and a
> >> >worker's ability is called capital _goods_.
> >>
> >> No, this is not about labor.
> >>
> >> The worker's time is used up in producing something, yet the workers
> >> experience and learning last on to be used again the next day in a way
> >> similar to how the hammer the worker used one day will be there the next.
> >
> > The defense for referring to human ability as capital
> >is stronger because the reward to "know how", will encourage many to
> >acquire it. Economics can play a part in the creation of "know how".
> >But the distinction is that the hammer, like the dam, has utility
> >without any specific human.
>
> Just like arithmatic.

Yep.



> >All the folks that build the dam or
> >made the hammer could be shot at dawn the day after the hammer or
> >dam was created and the hammer or dam would still have utility.
>
> And we could shoot all the math teachers and people would still have
> a stock of math knowledge from those teachers.

A very poor analogy in that none of these humans are capital.
Hence, their inalienable capabilities are not capital either. You may
_take_ the hammer from the man and thus deprive him of it and have it
for yourself or assign some other man to employ it. But you can't
take the "know how" and "knowledge" from the man thus depriving him
of it and/or "give" it to another. And though presumptions to the
contrary may make your macro world run very smoothly indeed , such
a "world" is not a representation of reality.



> >Human "know how" is a factor in wages.
>
> Just like any capital good, since this effects the marginal product
> of labor.

So you want everything to be capital that isn't wages? I thought
there was another pigeon hole to put things in. Gee, if we could get it
down to one classification _I_ could do the models.



> > Wages and capital are two totally different things.
>
> How about if you take this up with the likes of Gary Becker and Paul
> Romer?

Who are these dude's?



> >But I have far fewer reservations about
> >"know how" as capital than I do about land being referred to as
> >capital. Economic designs and manipulations can actually
> >affect the amount of "know how". If you are allowed to include
> >"know how" as capital and you were to design an economy that
> >encouraged capital development you would still be maximizing general
> >long term utility (a good thing to do). If, however, you design a
> >system that encourages land ownership you will not have done anything
> >that would be maximizing general long term utility. The rent from
> >land ownership is a burden on the producers of the society which,
> >when funneled into the hands of land owners, merely destroys aggregate
> >wealth.
>
> How is wealth destroyed by a transfer?

It is destroyed by opulent displays of power and pretense;
the burning of resources as a sacrifice to the God Almighty GDP.
By stuffing a mattress with deeds and IOU's won in a game to
see who can build the biggest monuments to stupidity. The
houses so big that the owners need to hire crews to clean them
and automobiles that cost more than the average wage earner's
home.


> Factor payments to land, or to existing capital, encourage efficient
> use of scarce resources.

If land were assessed a fee that confiscated 90% of the rental
value of the raw land (no fee on any improvements) and the
proceeds were distributed to every voter in the sovereignty
equally (Bill Gates and Freddy the freeloader get the same
amount), the increase in _real_ capital development would blow
your socks off. And further, if assets were taxed directly
to fund the enforcement of ownership rights there would be no
cycle of boom and bust. Only a steady stream of continuing
_real_ capital creation. Capital"ism" would, in fact, be the
cornucopia it is supposed to be.

ro...@telus.net

unread,
Dec 9, 2000, 4:16:53 AM12/9/00
to
On 8 Dec 2000 04:04:36 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
Witte) wrote:

>>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>> Word! Capital is generally taken in economics to be a factor of
>>>production that lasts over time, that is not used up in the act of producing
>>>other goods.
>>
>>This is a common confusion, aggregating the two entirely different
>>factors of production that the classical economists called "capital"
>>and "land." It would make as much sense for biologists to aggregate
>>lungs and air.
>

> No. Land is an example of a capital good.

No. It is not. Capital goods _are_, precisely, gradually used up in
the act of producing other goods. This is called "depreciation." 200
years ago, economists understood this. Today they do not.

>>> Experience and learning of workers are often treated as capital goods as well.
>>
>>You know you've left science behind when labor is called capital and a
>>worker's ability is called capital _goods_.
>

> No, this is not about labor.

You're right. It's about trying to conceal critical facts of
economics by deliberately falsifying the terminology.

> The worker's time is used up in producing something, yet the workers
>experience and learning last on to be used again the next day in a way
>similar to how the hammer the worker used one day will be there the next.

It is not similar. The hammer wears out with use. The worker gets
more skillful with experience. Furthermore, the hammer is a good. It
can be bought and sold. The worker's skill is not a good, because it
can only be put to use _by_him_.

So you are just flat wrong. Period.

-- Roy L

ro...@telus.net

unread,
Dec 9, 2000, 4:59:09 AM12/9/00
to
On 8 Dec 2000 17:25:05 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
Witte) wrote:

>In article <3A300CC2...@gte.net>,
>Mike Coburn <michael....@gte.net> wrote:
>>Mark Patrick Witte wrote:
>>
>>> No. Land is an example of a capital good.
>>
>> It is not. "capital" is something that is created by men
>>and it is in the best interest of men to reward such creation.
>
> A lot of things are created by man that are not capital.

Good example of a kindergarten-level logical fallacy used as a
diversionary tactic.

See if you can figure out where you went wrong when I restate the
exchange in abstract terms:

Coburn: All A is B.

Witte: A lot of B is non-A.

Does that make it clear enough?

>Capital
>goods are generally factors of production that don't get extinguished in the
>act of production.

Wrong. Capital goods depreciate with use. They wear out, decay with
age, or become obsolete.

>Barring the exception raised by Jim Blair, land is
>generally treated as a non-produced capital good and for many of the
>questions of interest in economics, it works just fine to lump it in with
>normal capital goods.

No. It doesn't. Unless you want to get certain particular answers to
those questions, that is....

>>The
>>more you can reward such creation the more capital you will see
>>created. Land is not created by men and no matter how much you
>>might try to reward the owner of land you will not gain any more
>>land. You do, however, cause a distortion that leads to less capital
>>creation.
>
> How so? Given that any distortions in the price of land lead to
>zero sum transfers between buyers and sellers, where is the social loss?

Where is the social loss in zero-sum transfers between buyers and
sellers of tulip bulbs, hmmmmm? Time to stop typing and start
thinking, pal.

Do you know how much money real estate agents rake off those
"zero-sum" transfers? How much allocative inefficiency results from
those transaction costs (e.g., people being reluctant to move closer
to their jobs, because they will drop $10K on the real estate agent)?


How much production is lost because ownership of land is so
extravagantly rewarded that large landowners do no productive work?
How much is lost because income tax is used to subsidize landowners,
reducing the incentive to work, attenuating labor price signals,
impeding division of labor, increasing variable production costs,
etc., etc., etc.? The fact that you are prepared to ignore all of
this -- or have never even thought of it -- speaks volumes.

>>Human "know how" is a factor in wages.
>
> Just like any capital good, since this effects the marginal product
>of labor.

Wrong. Capital goods can be bought and sold. Know how can only be
put to use or not.

>> Wages and capital are two totally different things.
>
> How about if you take this up with the likes of Gary Becker and Paul
>Romer?

Why? Are they as devoted to misleading terminology as you?

>> If, however, you design a
>>system that encourages land ownership you will not have done anything
>>that would be maximizing general long term utility. The rent from
>>land ownership is a burden on the producers of the society which,
>>when funneled into the hands of land owners, merely destroys aggregate
>>wealth.
>
> How is wealth destroyed by a transfer?

???? Let me try to make this as simple as possible.

Suppose you and I are working, each producing as much wealth as we
consume. Government comes along, and transfers the wealth I produce
to you. Where, now, is my motive to produce more wealth? Where is
yours?

_Get it_?

> Factor payments to land, or to existing capital, encourage efficient
>use of scarce resources.

No. Accurate factor payments _for_ land (i.e., land rents) encourage
efficient use of scarce resources. But those payments will be made in
any case, whoever ultimately collects them. Devoting those land rents
to the public expenditures that create the rents internalizes an
externality, encouraging more efficient use of resources than just
giving them to private landowners would.

-- Roy L

ro...@telus.net

unread,
Dec 9, 2000, 5:10:51 AM12/9/00
to
On 8 Dec 2000 13:49:11 GMT, Jim Blair <jeb...@facstaff.wisc.edu>
wrote:

>Mike Coburn <michael....@gte.net> wrote:
>
>>If it is land it is "unearned". That be the end of it.
>

>Are you talking here about Holland? All of that land that they built
>on after they made dikes to hold back the North Sea?

Right. The land is unearned. The dryness -- which is called
"improvement" -- is earned. But not, typically, by the people who get
most of the benefit of it. Like land improvements anywhere.

-- Roy L

ro...@telus.net

unread,
Dec 9, 2000, 5:15:05 AM12/9/00
to
On Thu, 7 Dec 2000 22:47:09 -0500, "David Lloyd-Jones"
<ico...@netcom.ca> wrote:

>"Mike Coburn" <michael....@gte.net> wrote
>


>> Robert indicates what has been done to the word so as to destroy
>> its meaning. Why am I not surprised that you would be supportive
>> of such destruction. It allows you and others to totally ignore

>> the difference between saving and investment.


>
>Tell us, Oh Mike: what is the difference between saving and investment?

Investment is spending on capital or other expenditures that increase
the capacity or efficiency of production. Saving is income in excess
of consumption and investment.

>> It allows you to
>> totally ignore the difference between earned wealth and land.
>

>This difference, Mike, being?

Wealth is earned by production. Land is not produced.

-- Roy L

Robert Vienneau

unread,
Dec 9, 2000, 10:52:15 AM12/9/00
to
Mark Patrick Witte wrote:

> Capital
> goods are generally factors of production that don't get extinguished in
> the
> act of production.

1.0 THE MODEL

Consider a simple economy in a stationary state whose output consists
entirely of wood. A worker plants trees at the start of the process of
production, which lasts for t years. No labor is required for the trees
to grow or to harvest the quantity of wood, q(t), available at the end
of t years. Assume that lengthening this process increases the harvest,
that is, q'(t) > 0. Also assume that each additional increment of
time increases the output less than the previous increment, that is,
q''(t) < 0. (This is stronger than needed; the absolute marginal
product of time can be increasing as long as the proportional marginal
product of time is decreasing.)

Wages are paid immediately to workers. Competitive firms take the
wage, w, and the interest rate, r, as given. Suppose the wage was above
the present value of output q(t). The firm could either deposit w
in a bank at the interest rate or produce wood. No profit-maximizing
firm would do the latter. Thus, the equilibrium wage cannot exceed the
present value of output. But if the wage was below the present value
of output, firms would expand production upon seeing an opportunity to
make pure economic profit. Thus, competition enforces an equality
between the wage and the present value of output.

What is the the present value of q(t)? The annual rate of interest
is 100 r%. Suppose the interest rate is compounded n times per year.
By definition, the per period interest rate is 100 (r/n) %. Table 1
shows the effects of compounding the wage.

TABLE 1: COMPOUNDING INTEREST

Number Of
Compounding
Periods Value
0 w
1 w ( 1 + n/r)
2 w ( 1 + n/r)^2
3 w ( 1 + n/r)^3
. .
. .
. .
t n w ( 1 + n/r)^(n t)

Since the wage is equal to the present value of output, Equation 1
holds:

q(t) = w ( 1 + n/r)^(n t) (1)

Or:

w = q(t) ( 1 + n/r)^(-n t) = q(t) ( 1 + gamma )^(-gamma r t) (2)

where gamma = n/r. Taking the limit as gamma increases without bound,
one obtains the wage for the case of continuous compounding:

w(t) = q(t) exp( -r t ) (3)

Consider a firm producing a steady state output of q(t). What will
the value of the firm's capital be at a point in time? The firm will
have goods in process at this point for producing output from this
point until t time units in the future. The value of these goods in
process is found by compounding the wages expended from -t time units
in the past until the current instant. That is, the value of capital
is the integral from -t to zero with respect to u of w(t) exp( -r u ).
Thus, the capital value is given by Equation 4:

k(t) = w(t) [ exp( r t ) - 1 ]/r (4)

Or:

k(t, r) = q(t) [ 1 - exp( -r t ) ]/r (5)

where the notation emphasizes the value of capital depends on the
production method and the interest rate. Notice this wage and value
of capital satisfy the accounting identity:

q(t) = w(t) + r k(t) (6)

2.0 THE OPTIMAL PROCESS LENGTH

The period between planting and harvesting of timber is a choice
variable in this model. From the construction of the so-called
factor price frontier, one knows that the optimal technique maximizes
the wage. Hence,

dw/dt = q'(t) exp( -r t ) - r q(t) exp( -r t) = 0 (7)

Thus, the length of the process used in production, t, is defined
implicitly by Equation 8:

r = q'(t)/q(t) (8)

3.0 WICKSELL EFFECTS

The above model shows how the value of output and capital depend
on the interest rate. In effect, I have traced out a parameteric
specification of a "smooth" aggregate neoclassical production
function q(k), where both output and capital are specified per
head. This production function can be differentiated:

dq/dk = ( dq/dr )/( dk/dr ) (9)

The numerator is easily found:

dq/dr = q'(t) dt/dr (10)

The denominator is more interesting. From the chain rule for
differentiation, one obtains:

dk(t, r)/dr = ( del k/del t) dt/dr + ( del k/ del r ) (11)

The first term on the right shows how the value of capital is altered
with the interest rate by a change in the optimal technique. This is
known as the real Wicksell effect. The second term shows how the
value of capital is altered with the interest rate, given the technique.
This is the price Wicksell effect.

The next step in the analysis is to determine the Wicksell effects.
The price Wicksell effect is easily found from Equation 5:


del k/del r = q(t) [ 1 - (1 - r t) exp( -r t) ]/r^2 (12)

For this simple model, (del k/del r) is always positive. The
determination of the real Wicksell effect requires one to calculate
the following derivative:

del k/del t = q'(t) [ 1 - exp( -r t) ]/r
+ q(t) r exp( -r t )/r (13)

Evaluating for the optimal process length, as given in Equation 8,
one obtains:

del k/del t = q'(t)/r (14)

Suppose price Wicksell effects were zero, which they are not. Then
one would have:

dq/dk = q'(t) dt/dr / [ ( q'(t)/r ) dt/dr ] = r (15)

But, since price Wicksell effects are positive, the denominator
in Equation 9 exceeds the real Wicksell effect. Consequently, the
marginal product of capital, dq/dk, is less than the equilibrium
interest rate in this model:

dq/dk < r (16)

Suppose one makes a regularity assumption that the real Wicksell
effect is always negative:

( del k/del t ) dt/dr < 0 (17)

That is, one considers the change in the optimal technique resulting
from a change in the interest rate. One assumes that the value of
the newly selected capital goods, evaluated at unchanged prices, is
such that a higher interest rate is associated with a lower capital
intensity. In general models of production, e.g. Austrian-Wicksell
flow-input flow-output models and a Sraffian analysis of the choice
of technique, this is an ad-hoc and arbitrary assumption. But if one
does make Burmeister's regularity assumption, Champernowne's chain
index for capital will be well-defined. This chain index is basically
found by adding up real Wicksell effects from an interest rate of
zero to the one in which one is interested. Using this measure and
a corresponding chain index for output, the equilibrium interest
rate is equal to the marginal product of capital. One should note
that the wage is no longer equal to the marginal product of labor
for these measures. Nor are they empirically observable. I don't
think this approach is all that interesting; its only purpose seems
to be to defend the failed aggregate Neoclassical model.

4.0 CONCLUSIONS

Notice that the above analysis uses a smooth aggregate production
function and that there initially seems to be no aggregation problems.
All firms are identical, and net output consists of a single
commodity. Thus, the inequality between the interest rate and the
marginal product of capital seems not to be the result of an aggregation
problem. It is also apparent it is not the affect of an assumption of
non-differentiable production functions. It is the result of non-zero
price Wicksell effects, as I have been saying for years, frequently
to incomprehension.

REFERENCES

Syed Ahmad, _Capital In Economic Theory: Neo-Classical, Cambridge,
and Chaos_, Edward Elgar, 1991.

Salvatore Baldone, "From Surrogate to Pseudo Production Functions,"
_Cambridge Journal of Economics_, V. 8, 1984, pp. 271-288.

Christian Bidard, "Wicksell and Douglas on Distribution and Marginal
Productivity," in _Critical Essays on Piero Sraffa's Legacy in
Economics_, (edited by H. D. Kurz), Cambridge University Press, 2000.

Edwin Burmeister, "Wicksell Effects," in _The New Palgrave: Capital
Theory_, (edited by J. Eatwell, M. Milgate, and P. Newman), Macmillan,
1990.

--
Try http://csf.colorado.edu/pkt/pktauthors/Vienneau.Robert/Bukharin.html
r c
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau

Mike Coburn

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Dec 9, 2000, 2:07:13 PM12/9/00
to
The model is impressive. Unfortunately, trees are not capital
in spite of Robert's insistence on planting them. A good many
trees sprout all on their own and it is irrelevant any way. Corn
nor barley nor pigs nor cows are capital either. The trees,
however can be considered to be land if they were not actually
planted. i.e,. if they arose naturally. We see that the trees
do not (in reality) depreciate as capital would so it might be
possible to call them land anyway but that might infer that corn
and barley is land and that is probably not correct either. The
value of the trees can and will be determined by men as the model
indicates. But all real value is measured in labor. Interest
paid to money itself or rent from land are "gifts" that government
awards to the current holder of privilege. I think the claim of
_inventory_ being capital is the absurdity that creates this rather
slippery slope. This claim is also incorrect if "capitalism" is
to actually deliver on its promise of maximizing general utility.

--

Coburn ---
The opinions expressed herein above are mine. They are my property
so you can't have them. But use them. No rent or interest due.

Steven Hales

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Dec 9, 2000, 7:31:02 PM12/9/00
to

"Mike Coburn" <michael....@gte.net> wrote in message
news:3A321BB0...@gte.net...

> The model is impressive. Unfortunately, trees are not capital
> in spite of Robert's insistence on planting them.

It is an abstract example you dope.


Mark Patrick Witte

unread,
Dec 9, 2000, 8:13:40 PM12/9/00
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In article <3a31f678...@news.telus.net>, <ro...@telus.net> wrote:
>On 8 Dec 2000 04:04:36 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>>In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>>>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>>Witte) wrote:
>>>
>>>> Word! Capital is generally taken in economics to be a factor of
>>>>production that lasts over time, that is not used up in the act of producing
>>>>other goods.
>>>
>>>This is a common confusion, aggregating the two entirely different
>>>factors of production that the classical economists called "capital"
>>>and "land." It would make as much sense for biologists to aggregate
>>>lungs and air.
>>
>> No. Land is an example of a capital good.
>
>No. It is not. Capital goods _are_, precisely, gradually used up in
>the act of producing other goods. This is called "depreciation." 200
>years ago, economists understood this. Today they do not.

Could you supply me with the definitive definition of capital? A
non-zero rate of depreciation is always required? I think not, and the case
of zero depreciation is often used in presenting simple cases of models
since the results are usually hand-computable. Further, if land were to
depreciate, as it is modelled to do in much environmental economics
literature, then land would count in your definition of a capital good?

>>>> Experience and learning of workers are often treated as capital goods as well.
>>>
>>>You know you've left science behind when labor is called capital and a
>>>worker's ability is called capital _goods_.
>>
>> No, this is not about labor.
>
>You're right. It's about trying to conceal critical facts of
>economics by deliberately falsifying the terminology.

As Will Rogers said of President Hoover, "It's not what he doesn't
know that bothers me, it's what he does know that just ain't so."

>> The worker's time is used up in producing something, yet the workers
>>experience and learning last on to be used again the next day in a way
>>similar to how the hammer the worker used one day will be there the next.
>
>It is not similar. The hammer wears out with use. The worker gets
>more skillful with experience. Furthermore, the hammer is a good. It
>can be bought and sold. The worker's skill is not a good, because it
>can only be put to use _by_him_.
>
>So you are just flat wrong. Period.

Yeah, me and Becker, Romer, Mincer, and all the others who do human
capital models.

>
>-- Roy L


Mark Patrick Witte

unread,
Dec 9, 2000, 8:46:54 PM12/9/00
to
In article <3a31f927...@news.telus.net>, <ro...@telus.net> wrote:
>On 8 Dec 2000 17:25:05 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>Witte) wrote:
>
>>In article <3A300CC2...@gte.net>,
>>Mike Coburn <michael....@gte.net> wrote:
>>>Mark Patrick Witte wrote:
>>>
>>>> No. Land is an example of a capital good.
>>>
>>> It is not. "capital" is something that is created by men
>>>and it is in the best interest of men to reward such creation.
>>
>> A lot of things are created by man that are not capital.
>
>Good example of a kindergarten-level logical fallacy used as a
>diversionary tactic.
>
>See if you can figure out where you went wrong when I restate the
>exchange in abstract terms:
>
>Coburn: All A is B.
>
>Witte: A lot of B is non-A.
>
>Does that make it clear enough?

It is clear that your knowledge of logic is on par with your
knowledge of economics. I was just pointing out that "man made" is not a
sufficient condition for being capital, nor I would add, would it need be a
necessary condition.

>>Capital
>>goods are generally factors of production that don't get extinguished in the
>>act of production.
>
>Wrong. Capital goods depreciate with use. They wear out, decay with
>age, or become obsolete.

So non-zero depreciation is a necessary condition for being a
capital good? Why? Who says?

>>Barring the exception raised by Jim Blair, land is
>>generally treated as a non-produced capital good and for many of the
>>questions of interest in economics, it works just fine to lump it in with
>>normal capital goods.
>
>No. It doesn't. Unless you want to get certain particular answers to
>those questions, that is....
>
>>>The
>>>more you can reward such creation the more capital you will see
>>>created. Land is not created by men and no matter how much you
>>>might try to reward the owner of land you will not gain any more
>>>land. You do, however, cause a distortion that leads to less capital
>>>creation.
>>
>> How so? Given that any distortions in the price of land lead to
>>zero sum transfers between buyers and sellers, where is the social loss?
>
>Where is the social loss in zero-sum transfers between buyers and
>sellers of tulip bulbs, hmmmmm? Time to stop typing and start
>thinking, pal.

OK, take a deep breath and concentrate, this point is slightly
subtle so you may need to read it four or five times. It's common to treat
land as a non-reproducible good, it would be very strange to treat tulip
bulbs that way. As such, productive incentives matter little in the first
case, but a lot in the second. OK, stop and re-read. (However, some people
would wish to extend matters to a discussion of the capital value of the
genetic specifics of various types of tulips, but those people will have to
go unsatisfied here.)

>Do you know how much money real estate agents rake off those
>"zero-sum" transfers? How much allocative inefficiency results from
>those transaction costs (e.g., people being reluctant to move closer
>to their jobs, because they will drop $10K on the real estate agent)?

There is considerable literature on the effiencies or inefficiences
of "middlemen" in markets as transmitters of information and transactions
costs reducers. If a private agent prefers, she can sell property on her
own, incurring only government filing fees. However, most people find it
worthwhile to use an agent, and such agents can even be worthwhile in some
cases.

>How much production is lost because ownership of land is so
>extravagantly rewarded that large landowners do no productive work?

OK, I'm game, how much? I don't recall Ricardo or Mill coming up
with firm estimates here. What is the answer?

>How much is lost because income tax is used to subsidize landowners,
>reducing the incentive to work, attenuating labor price signals,
>impeding division of labor, increasing variable production costs,
>etc., etc., etc.? The fact that you are prepared to ignore all of
>this -- or have never even thought of it -- speaks volumes.

Problems with the income tax code are another issue entirely.

>>>Human "know how" is a factor in wages.
>>
>> Just like any capital good, since this effects the marginal product
>>of labor.
>
>Wrong. Capital goods can be bought and sold. Know how can only be
>put to use or not.
>
>>> Wages and capital are two totally different things.
>>
>> How about if you take this up with the likes of Gary Becker and Paul
>>Romer?
>
>Why? Are they as devoted to misleading terminology as you?

Yeah, we meet almost every week to try to confuse the public. My job
is to spam the internet, they fill up the top academic journals.

>>> If, however, you design a
>>>system that encourages land ownership you will not have done anything
>>>that would be maximizing general long term utility. The rent from
>>>land ownership is a burden on the producers of the society which,
>>>when funneled into the hands of land owners, merely destroys aggregate
>>>wealth.
>>
>> How is wealth destroyed by a transfer?
>
>???? Let me try to make this as simple as possible.
>
>Suppose you and I are working, each producing as much wealth as we
>consume. Government comes along, and transfers the wealth I produce
>to you. Where, now, is my motive to produce more wealth? Where is
>yours?

My incentive to create more wealth is that I would have even more
wealth! (Of course, the wealthiest nations have among the highest labor
force participation rates so this is not so surprising.) As for you, you'd
either have to learn to live without consumption or die.

More seriously, I'm no fan of Ricardian rents but the wealth
transfer from land rentals does not obviously destroy wealth. Perhaps you
could say that a land tax would be non-distortionary and thus would allow
for a reduction in other taxes for a Ramsey efficiency gain, but even that
turns out to be unclear given an initial system where land is not so tax and
thus this change affects asset values that included capitalized rentals.

>_Get it_?
>
>> Factor payments to land, or to existing capital, encourage efficient
>>use of scarce resources.
>
>No. Accurate factor payments _for_ land (i.e., land rents) encourage
>efficient use of scarce resources. But those payments will be made in
>any case, whoever ultimately collects them. Devoting those land rents
>to the public expenditures that create the rents internalizes an
>externality, encouraging more efficient use of resources than just
>giving them to private landowners would.

How about if you write out exactly what your defintion of what you
think capital has to be and then write out what your definition of an
externality is and then explain why there is an externality to land rental.
Are you making a "marginal land" entering production argument?

Mark Patrick Witte

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Dec 9, 2000, 9:13:11 PM12/9/00
to
In article <3A318409...@gte.net>,

Mike Coburn <michael....@gte.net> wrote:
>Mark Patrick Witte wrote:
>>
>> In article <3A300CC2...@gte.net>,
>> Mike Coburn <michael....@gte.net> wrote:
>> >Mark Patrick Witte wrote:
>> >> In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>> >> >On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>> >> >Witte) wrote:
>> >> >
>> >> >> Word! Capital is generally taken in economics to be a factor of
>> >> >>production that lasts over time, that is not used up in the act of producing
>> >> >>other goods.
>> >> >
>> >> >This is a common confusion, aggregating the two entirely different
>> >> >factors of production that the classical economists called "capital"
>> >> >and "land." It would make as much sense for biologists to aggregate
>> >> >lungs and air.
>> >>
>> >> No. Land is an example of a capital good.
>> >
>> > It is not. "capital" is something that is created by men
>> >and it is in the best interest of men to reward such creation.
>>
>> A lot of things are created by man that are not capital.
>
>But NONE of them are land.

So exactly what is your definition of capital? Must it exclude
land? Can land be damaged so that its value is reduced? If so, can man
create "negative land" by such actions?

> Capital
>> goods are generally factors of production that don't get extinguished in the
>> act of production. Barring the exception raised by Jim Blair, land is
>> generally treated as a non-produced capital good and for many of the
>> questions of interest in economics, it works just fine to lump it in with
>> normal capital goods.
>
>Thank you for confirming what I have said and for using Mr. Blair as
>your side kick.

So your response to his example of men creating land is...ad
hominem?

> The inclusion of land as capital makes your models
>seem to work and so, therefore, in the tradition of neo classical
>econ, land must be capital. But a model that attempts to predict
>capital creation will most certainly not be efficacious in regard
>to land, while it will be so for buildings, and roads and dams and
>factories. This would lead a normal, well adjusted human to the
>conclusion that land must somehow not be capital in the same sense
>as these other ingredients. That, in fact, it must be something
>quite different. Like, maybe, it is just land.

For many questions, land is best treated as capital, for other
questions, it is best treated differently. Different questions, different
models.

>> >The
>> >more you can reward such creation the more capital you will see
>> >created. Land is not created by men and no matter how much you
>> >might try to reward the owner of land you will not gain any more
>> >land. You do, however, cause a distortion that leads to less capital
>> >creation.
>>
>> How so? Given that any distortions in the price of land lead to
>> zero sum transfers between buyers and sellers, where is the social loss?
>
>If I can use wealth appropriated from the non land owners
>via income tax and sales taxes to finance the government
>that enforces my land rights and to develop infrastructure
>to increase the value of those rights to collect rent, then
>they (the non owners) will have to work very hard indeed
>to ever be able to become owners. And why, pray tell,
>would I risk developing anything at all or ever changing
>anything at all. Yes, the sum is zero but the nobility
>gets more "noble" as the serfs get the wrench. Up there
>in macro land the world may be a very nice place. But
>down here in the trenches where the real stuff happens it
>ain't so cut and dried.

Yeah, if only Bill Gates had become a land owner, he might have
become rich.

>
>> >> >> Experience and learning of workers are often treated as capital goods as well.
>> >> >
>> >> >You know you've left science behind when labor is called capital and a
>> >> >worker's ability is called capital _goods_.
>> >>
>> >> No, this is not about labor.
>> >>
>> >> The worker's time is used up in producing something, yet the workers
>> >> experience and learning last on to be used again the next day in a way
>> >> similar to how the hammer the worker used one day will be there the next.
>> >
>> > The defense for referring to human ability as capital
>> >is stronger because the reward to "know how", will encourage many to
>> >acquire it. Economics can play a part in the creation of "know how".
>> >But the distinction is that the hammer, like the dam, has utility
>> >without any specific human.
>>
>> Just like arithmatic.
>
> Yep.
>
>> >All the folks that build the dam or
>> >made the hammer could be shot at dawn the day after the hammer or
>> >dam was created and the hammer or dam would still have utility.
>>
>> And we could shoot all the math teachers and people would still have
>> a stock of math knowledge from those teachers.
>
> A very poor analogy in that none of these humans are capital.

Indeed, it's is their knowledge and experience that are often
modeled as capital.

>Hence, their inalienable capabilities are not capital either. You may
>_take_ the hammer from the man and thus deprive him of it and have it
>for yourself or assign some other man to employ it. But you can't
>take the "know how" and "knowledge" from the man thus depriving him
>of it and/or "give" it to another. And though presumptions to the
>contrary may make your macro world run very smoothly indeed , such
>a "world" is not a representation of reality.
>
>> >Human "know how" is a factor in wages.
>>
>> Just like any capital good, since this effects the marginal product
>> of labor.
>
> So you want everything to be capital that isn't wages? I thought

Not at all, but this is one strong commonality.

>there was another pigeon hole to put things in. Gee, if we could get it
>down to one classification _I_ could do the models.

Good luck, there are no barriers to entry.

>
>> > Wages and capital are two totally different things.
>>
>> How about if you take this up with the likes of Gary Becker and Paul
>> Romer?
>
>Who are these dude's?

Oh, drinking buddies of mine. We're all in on a scheme to confuse
the general public. (I think Becker is somehow funded by the Swedes....)

>
>> >But I have far fewer reservations about
>> >"know how" as capital than I do about land being referred to as
>> >capital. Economic designs and manipulations can actually
>> >affect the amount of "know how". If you are allowed to include
>> >"know how" as capital and you were to design an economy that
>> >encouraged capital development you would still be maximizing general
>> >long term utility (a good thing to do). If, however, you design a
>> >system that encourages land ownership you will not have done anything
>> >that would be maximizing general long term utility. The rent from
>> >land ownership is a burden on the producers of the society which,
>> >when funneled into the hands of land owners, merely destroys aggregate
>> >wealth.
>>
>> How is wealth destroyed by a transfer?
>
>It is destroyed by opulent displays of power and pretense;

Ah, gotcha! I hadn't thought of that; silly of me really since it's
so obvious.

David Lloyd-Jones

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Dec 9, 2000, 10:24:59 PM12/9/00
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"Mark Patrick Witte" <mwi...@merle.acns.nwu.edu> wrote to Mike:

> Could you supply me with the definitive definition of capital? A
> non-zero rate of depreciation is always required?

Smallest possible quibble: capital assets don't depreciate, they wear out
(or not, as the case may be).

Bookkeeping entries depreciate.

-dlj.


Mark Patrick Witte

unread,
Dec 9, 2000, 10:45:02 PM12/9/00
to
In article <4ICY5.6014$t3....@tor-nn1.netcom.ca>,

Well...depreciate generally means "to lower price or estimated
value", which is what happens to the prices or estimated values of things as
they wear out.

>
> -dlj.
>
>
>
>
>
>


David Lloyd-Jones

unread,
Dec 10, 2000, 1:42:56 PM12/10/00
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"Mark Patrick Witte" <mwi...@merle.acns.nwu.edu> wrote
> David Lloyd-Jones <ico...@netcom.ca> wrote:
> >Smallest possible quibble: capital assets don't depreciate, they wear out
> >(or not, as the case may be).
> >Bookkeeping entries depreciate.
>
> Well...depreciate generally means "to lower price or estimated
> value", which is what happens to the prices or estimated values of things
as
> they wear out.
>

Exactly. Both prices and estimated values are bookkeeping entries. The map
is not the territory, etc....

-dlj.


ro...@telus.net

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Dec 11, 2000, 3:56:59 AM12/11/00
to
On 10 Dec 2000 01:13:40 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
Witte) wrote:

>In article <3a31f678...@news.telus.net>, <ro...@telus.net> wrote:
>>On 8 Dec 2000 04:04:36 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>Witte) wrote:
>>
>>>In article <3a302c9a...@news.telus.net>, <ro...@telus.net> wrote:
>>>>On 7 Dec 2000 04:23:46 GMT, mwi...@merle.acns.nwu.edu (Mark Patrick
>>>>Witte) wrote:
>>>>
>>>>> Word! Capital is generally taken in economics to be a factor of
>>>>>production that lasts over time, that is not used up in the act of producing
>>>>>other goods.
>>>>
>>>>This is a common confusion, aggregating the two entirely different
>>>>factors of production that the classical economists called "capital"
>>>>and "land." It would make as much sense for biologists to aggregate
>>>>lungs and air.
>>>
>>> No. Land is an example of a capital good.
>>
>>No. It is not. Capital goods _are_, precisely, gradually used up in
>>the act of producing other goods. This is called "depreciation." 200
>>years ago, economists understood this. Today they do not.
>
> Could you supply me with the definitive definition of capital?

Goods that can be used in the production of goods and services. Goods
are man-made physical objects that can be bought and sold (the
physical substrate of a worker's skill may in some sense be a man-made
physical object, but as it cannot be bought and sold, it is not a
good).

>A non-zero rate of depreciation is always required? I think not, and the case
>of zero depreciation is often used in presenting simple cases of models
>since the results are usually hand-computable.

Modern physics tells us that no physical object is eternal. Some
capital goods may have depreciation rates so low that they can be
ignored -- i.e., useful lives that are long in comparison to a human
lifetime. It takes a long time to wear out something like a plumb
bob.

>Further, if land were to
>depreciate, as it is modelled to do in much environmental economics
>literature, then land would count in your definition of a capital good?

No. Land (meaning natural resources of all sorts) can lose value
through human action or inaction, but cannot be produced by labor, and
is therefore not a good, and not capital. Also, unlike capital,
"depreciated" land, if left alone, will gradually be restored to its
undepreciated state.

>>> No, this is not about labor.
>>
>>You're right. It's about trying to conceal critical facts of
>>economics by deliberately falsifying the terminology.
>
> As Will Rogers said of President Hoover, "It's not what he doesn't
>know that bothers me, it's what he does know that just ain't so."

Prof. Mason Gaffney of UC Riverside has written a paper detailing
(including quotes from their own writings) how the founders of
neo-classical economics, like J.B. Clark, set out to eliminate the
distinction between land and capital purely in order to deny Henry
George and the Single Taxers the logical tools they had been using to
prove they were right.

>>So you are just flat wrong. Period.
>
> Yeah, me and Becker, Romer, Mincer, and all the others who do human
>capital models.

Right.

-- Roy L

Mike Coburn

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Dec 11, 2000, 4:26:17 AM12/11/00
to

I appeciate your assistence in this matter. If not
for your astute observation I might still be at odds
with the proper definition of capital in support
of a beneficial capitalistic system.

Thank you very much,
asshole

Mike Coburn

unre