For Menger, The Term “Capital” Belongs to the Sphere of Economic Calculation, Not Production

A considerable part of the paper of Endres and Harper is dedicated to the demonstration that Carl Menger and Ludwig Lachmann endorse the same concept of capital and that their approach has to be distinguished from those of other members of the Austrian School. In this short comment, it has been shown that this interpretation cannot be upheld at all. Rather, the opposite is true. Lachmann strongly rejects the capital concept envisioned by Menger. Their notions of capital are diametrically opposed to each other, and it is very misleading to lump them together and call them the Menger–Lachmann Trajectory. This does not imply that Lachmann’s capital theory does not build upon some central ideas contained in Menger’s Grundsätze. Even in his monograph, Menger (1888, p. 9) refers to his classification of goods into those of lower and higher order as a very important one. However, Menger makes clear that these ideas have nothing to do with capital theory. For him, “capital” is a term that belongs to the sphere of economic calculation, not to the theory of production. Menger (1888) does not elaborate on this point because his intention is mainly to criticize other theories of capital. But, in view of the evidence provided in this short comment, it should be clear that it constitutes a misclassification to lump Menger and Lachmann together.

—Eduard Braun, “The Menger-Lachmann Trajectory on Capital: A Comment on Endres and Harper,” Journal of the History of Economic Thought 36, no. 1 (March 2014): 101.