ABSTRACT
Market economies are characterized by complex capital structures, in which individual complementary capital goods combine, either directly or indirectly through the market process, to produce valued outputs. All production is essentially “team production.” We have noted, at various points, the role of knowledge in this process. Knowledge is necessary for action, and, indeed, motivates action. Multiperiod plans involving capital are informed in various ways by the knowledge of the planners. In this chapter we examine in more detail the importance and nature of knowledge in the production of valued outputs. We shall see that the human capital literature, which has developed in the last three or more decades, has much that is relevant to an understanding of capital in general, even more so when a disequilibrium framework is assumed.
