“The Maintenance of Capital,” Profits, Interest and Investment: and Other Essays on The Theory on Industrial Fluctuations. London: Routledge & Kegan Paul, 1939.

Excerpt:

“The significance of the problem. It is not likely that in the whole field of economics there are many more concepts which are at the same time so generally used and so little analyzed as that of a “constant amounts of capital.” But while in this investigation of the effects of nearly any change this is almost without exception treated as a given datum, the question what this assumption exactly means is rarely asked.  To most economists the answer to it has apparently seemed so simple and obvious that they have never attempted to state it. In consequence the difficulties involved have hardly ever been realized, still less have they been adequately investigated.

The difficulties of this problem would undoubtedly have been realized if economists had been more generally conscious of its importance. But although, even in the analysis of a stationary equilibrium, inclusion of the “quantity of capital” among the determinants of that equilibrium means that something of which is the result of the equilibrating process, is treated as if it were a datum, this confusion was made relatively innocuous by the limitations of the static method, which while it describes the conditions of a state of equilibrium, does not explain how such a state is brought about.”

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