ABSTRACT
Capital Theory was once an important part of the education of an economist. Capital accumulation is seen to be an indispensable requirement for economic growth along with other aspects of the production function. Recently, skepticism has emerged from another direction, namely, from a reexamination of the meaning of the concept of “capital” itself. Capital has proven to be a difficult and frequently confusing concept because it has three inseparable dimensions, namely, time, quantity (meaning physical dimensionality), and value. By contrast, conceptions of value used in the area of academic and practical finance have been based firmly in value. Capital is there understood “in monetary terms.” The time dimension especially is made clear via the introduction of the financial concept of duration. Duration, which is a measure of the “money-value of the time” involved in any project, is central to our analysis.
