ABSTRACT
To formulate a subjectivist theory of a capital-using economy, we can begin by considering, from a subjectivist viewpoint, what Adam Smith called “that early and rude state of society which precedes both the accumulation of stock and the appropriation of land. Smith sought to link the objects of consumption to a different sort of object, namely labor, so as to establish that there is a regular pattern in the natural order of things. The primary focus of the Austrian theory of capital and interest is the prices of individual capital goods and of other inputs. Actual prices, of course, will provide an imperfect reflection of the general market rate of time discount owing to the absence of complete intertemporal coordination. Before turning to the sort of preference changes that serve as the focus of analysis for the Austrian school, two other views about the relevant source of variation in final output can be identified.
