An historical and critical study of the development of the capital concept
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1937
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This study is a concrete application of the Veblenian distinction between the industrial and the business aspects of modern economic activity. So habitual has it been for the economist to take the productivity of capital as a matter of course that he has never thought it necessary to inquire into the historical background of the capital concept. But the student who looks carefully at the traditional explanation of capital creation in an effort to see just what it is that is productive about capital finds that there is a great disjunction between the industrial processes and the accumulated capital funds which are regarded as productive. The perception of this discontinuity immediately raises the question of how such a confusion came about. The attempt to understand this phenomenon necessarily takes the student back into the historical origins of the concept. These origins go back to the close of the Middle Ages when middle class town life began to take on such surprising vitality that modern economic historians have referred to the period as one in which a commercial revolution took place. Starting at this point, an effort has been made to trace the concept forward until we reach the modern conception of capital. This study can claim to have discovered no hitherto unknown facts which might throw new light on the economic development of early modern times. Such a thing would be quite impossible without access to the great museums and other repositories of old historical materials. The information employed is available in the standard works on early economic life, and the purpose of the paper is rather to interpret those facts already available to the general student in such a way as to throw the capital concept into new relief