Tuesday, November 24, 2020

In the “Mengerian” Approach to Capital and Interest the ENTIRE Explanatory Burden Is Assigned to Consumer Valuations

In that controversy [Cambridge Capital Controversy] mainstream neoclassical theory was under relentless attack by economists seeking to reverse the marginalist revolution and to return to the classical perspective. The critics, especially insofar as they were following Sraffa (1960), argued for an economics in which the objective conditions of production determine economic events, with virtually no role assigned to consumer demand. We wish to emphasize that what was overlooked in that debate was the existence of a third theoretical approach (a “Mengerian” approach) to capital and interest issues, in which the entire explanatory burden is assigned to consumer valuations.

—Israel M. Kirzner, author's introduction to Essays on Capital and Interest: An Austrian Perspective, ed. Peter J. Boettke and Frédéric Sautet, The Collected Works of Israel M. Kirzner (Indianapolis: Liberty Fund, 2010), 5.


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