ABSTRACT
I t is not easy to give an exposition of Knight's theory of capital and interest.l Over a number of years Knight devoted many papers to the subject; and, as anyone who ever attempted to work his way through Knight's theory knows, these writings have passages which are very difficult to understand and also, either apparently or really, contradictory. I can claim no more than an earnest effort to understand his theory, but I cannot guarantee that Knight himself would accept my exposition as a correct presentation of his thought on all points. The possibility of disavowal is a risk which everyone must run who undertakes this task. 2
In order to make Knight's theory understood it will be necessary to go a little further afield and to begin with his views on the production process.
