Economics Quote by Ludwig Lachmann
““The generic concept of capital without which economists cannot do their work has no measurable counterpart among material objects; it reflects the entrepreneurial appraisal of such objects. Beer barrels and blast furnaces, harbour installations and hotel-room furniture are capital not by virtue of their physical properties but by virtue of their economic functions. Something is capital because the market, the consensus of entrepreneurial minds, regards it as capable of yielding an income. This does not mean that the phenomena of capital cannot be comprehended by clear and unambiguous concepts. The stock of capital used by society does not present a picture of chaos. Its arrangement is not arbitrary. There is some order in it.””
About This Quote
Source Book: Theory of Capital and Production, Ludwig Lachmann, 1935
Capital is defined by its economic role, not its physical form; markets assign value based on expected income.
In simple terms: Capital's value comes from its function, not its material.
Key Takeaway
Recognize the functional value of assets.
Themes
economics
capital
valuation
Mood
analytical
objective
Type
theoretical
educational
When to use this quote
- investment decisions
- business planning
- policy analysis
Key Concepts
entrepreneurship
market theory
asset management
Questions to Reflect On
- What assets in your life serve primarily functional purposes?
- How do markets shape your perception of value?
A Different Perspective
Overemphasis on physical attributes can mislead valuation.
