Tools, machinery and other man-made elements used to produce goods and services


Bauer, Peter (1915-2002), by James A. Dorn, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
"By observing economic reality and adhering to the logic of the price system, Bauer refuted key propositions of orthodox development economics, the most basic of which was the idea of a 'vicious circle of poverty.' Poor countries were said to be poor because people had low incomes and could not generate sufficient savings to allow for capital accumulation, which was widely viewed as a key determinant of economic growth. Bauer observed that many people and many countries had moved from poverty to prosperity and that large-scale capital investment is neither necessary nor sufficient for material advance."
Related Topics: Peter Thomas Bauer, Free Trade
Capital Goods and Capital, by Ludwig von Mises, Human Action, 1949
Chapter 15, Section 2; explains what are capital goods, differentiates them from "capital", defines other terms such as saving, income and capital consumption, and discusses spurious concepts such as real capital and social capital
"At the outset of every step forward on the road to a more plentiful existence is saving--the provisionment of products that makes it possible to prolong the average period of time elapsing between the beginning of the production process and its turning out of a product ready for use and consumption. The products accumulated for this purpose are either intermediary stages in the technological process, i.e. tools and half-finished products, or goods ready for consumption that make it possible for man to substitute, without suffering want during the waiting period, a more time-absorbing process for another absorbing a shorter time. These goods are called capital goods."
Inequality of Wealth and Incomes, by Ludwig von Mises, The Freeman, May 1955
Describes how attempts to equalize incomes and wealth lead to lowered standard of living for the masses and eventually to socialism
"The Ford enterprises would not exist if Henry Ford's profits had been taxed away as soon as they came into being. The business structure of 1895 would have been preserved. The accumulation of new capital would have ceased or at least slowed down considerably. The expansion of production would lag behind the increase of population."
Related Topics: Free Market, Socialism, Taxation
Minimum Wage Rates, by Ludwig von Mises, Human Action, 1949
Chapter 30, "Interference With the Structure of Prices", Section 3; discusses the setting of minimun wages both by legislation and by collecitve bargaining, pointing out some of the resulting problems
"Tools and machinery are primarily not labor-saving devices, but means to increase output per unit of input. They appear as labor-saving devices if looked upon exclusively from the point of view of the individual branch of business concerned. Seen from the point of view of the consumers and the whole of society, they appear as instruments that raise the productivity of human effort. They increase supply and make it possible to consume more material goods and to enjoy more leisure."
The Brilliance of Turgot, by Murray Rothbard, 1986
Biography and review of Turgot's major writings; introduction to The Turgot Collection
"In his great 'Reflections,' Turgot pointed out that wealth is accumulated by means of consumed and saved annual produce. Savings are accumulated in the form of money, and then invested in various kinds of capital goods. Furthermore, as Turgot pointed out, the 'capitalist-entrepreneur' must first accumulate saved capital in order to 'advance' his payment to laborers while the product is being worked on. In agriculture, the capitalist-entrepreneur must save funds to pay workers, buy cattle, pay for buildings and equipment, etc., until the harvest is reaped and sold and he can recoup his advances. And so it is in every field of production."
The Economic Role of Saving and Capital Goods, by Ludwig von Mises, The Freeman, Aug 1963
Explains there is a third factor of production aside from nature's resouces and human labor, and also that entrepreneurial judgement is necessary to attain the desired end of production
"Capital goods come into existence by saving. A part of the goods produced is withheld from immediate consumption and em­ployed for processes the fruits of which will only mature at a later date. ... Civilized man produces tools and intermediary products in the pursuit of long-range designs that finally bring forth results which direct, less time-consuming methods could never have attained, or could have attained only with an incomparably higher expenditure of labor and material factors."
Related Topics: Entrepreneurship, Technology, Wages


Capital and Interest, by Eugen Böhm von Bawerk, 1884
3 volumes: History and Critique of Interest Theories, Positive Theory of Capital, and Further Essays on Capital Interest. Electronic text based on 1890 translation, available at The Library of Economics and Liberty.