Published Friday, February 16, 2007 by Friedrich A. Hayek
The purpose of this article, wrote Friedrich Hayek in 1937, is to state a proposition which underlies the modern "monetary over-investment theories" of the trade cycle in a form in which, as far as I know, it has never before been expressed but which seems to make this particular proposition so obvious as to put its logical correctness beyond dispute. It should, moreover, clear up some of the confusion and misunderstandings which have made it so difficult to come to an agreement on the purely analytical points involved. It will surprise nobody to find the source of this confusion in the ambiguity of the term capital.
(Original Text)
Investment that Raises the Demand for Capital (2.78 MB)