Why Capital Needs Entrepreneurs | Antony P. Mueller

The productivity theory of capital dominates the popular view and public discussions. It presumes that capital generates the yield like a tree begets its fruits. In this view, more savings imply more investment, and more investment generates a higher capital stock, which in turn raises future yields. The belief is widespread that monetary assets grow and render automatically the returns. Yet already at the end of the 19 thcentury the Austrian economist von Eugen von Böhm-Bawerk exploded the productivity theory of capital. He showed that without entrepreneurial action…