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Capital and TimeA Neo-Austrian Theory$
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J. R. Hicks

Print publication date: 1987

Print ISBN-13: 9780198772866

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198772866.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 12 May 2021

The Process and Its Profiles

The Process and Its Profiles

(p.14) II The Process and Its Profiles
Capital and Time

John Hicks

Oxford University Press

This chapter begins with a discussion of the productive process, which is defined as a scheme by which a flow of inputs is converted into a flow of outputs. It then examines the viability of time-shapes, considering the conditions that must be satisfied by the time-profile of a process in order that it should be viable. The chapter presents a Fundamental Theorem and argues that if capitalization is performed at the rate of interest which belongs to the process, the forward measures of capital are the same. But if a process with yield that is greater than the market rate of interest is considered — and if the discounting (and accumulating) at the market rate of interest is performed — the value of capital, measured forward, will be greater than the backward (or cost) measure, at every stage of the process.

Keywords:   productive process, time-shapes, flow, capital, interest, Fundamental Theorem

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