ABSTRACT
While enterprises are central to capitalist societies, their calculations only make sense within the broader framework of capitalist institutions, which particularly includes money and markets. The chapter explains the purpose of economic calculations in a society characterised by these institutions. Financial accounting, according to the revenue-expense approach, shows profits wherever an enterprise has detected gaps in the price structure and has therefore contributed to the equilibration of supply and demand and the tendency towards a uniform return on equity. In this way, the entire structure of production becomes ordered and geared to consumer demand, based on the information provided by retrospective calculation. Prospective economic calculation, on the other hand, supports and enables creative destruction, innovation, and progress. Investment appraisal and valuation create decentralised professional information on where capital can be invested in a profitable way. In accordance with Schumpeter's theory of the entrepreneur, they help entrepreneurs detect areas in the economy where resources can be employed more profitably than in their current occupation. In this way, prospective calculation contributes to the dynamics of capitalism. Without it, the economy would freeze and growth would be almost impossible.
