ABSTRACT

It is no part of our present purpose to embark upon a re-examination of the basic concepts of capital theory. That ground has already received its fair share of attention, though with no very definite results. Since there is still no general agreement as to what classes of goods should be regarded as 'capital', it is fruitless to define 'gross investment' as all expenditure on the provision or replacement of those classes of goods. It is much better to consider the purpose for which a good is used than the physical form in which it happens to appear. In this paper, therefore, the emphasis will be on the purpose of an expenditure. If goods are used in the production of further goods, that is 'investment'. In other words, investment is 'the act of applying a unit of input in any process of production'.1