ABSTRACT
The demand for capital goods, bonds, equities, and other stocks that are valued for the stream of monetary and psychic income yielded can only be understood by considering the exchange between goods at different dates. The model of capital and labor accumulation just set out is only of limited help, therefore, in understanding growth in such countries and needs to be significantly modified. If the rate of growth of "physical-labor" were the same as the rate of growth of human capital, the marginal productivity of and the rate of return on each factor would not change over time. The price of capital goods is determined only by the opportunity cost of producing capital goods, as long as equilibrium occurs in the infinitely elastic sections of the investment or consumption curve. One modification is to introduce continual progress in the technology of producing consumer and capital goods.
