It is logically obvious that while capital cannot engage in production beyond the limits of existing available knowledge, knowledge can and does exist without the capital necessary to put it to use. Technology and its improvement, therefore, play no direct role in the investment and production process; technology, while important, must always work through an investment of capital. As was stated above, even the most dramatic capital-saving invention, such as oil-drilling, can be put to use only by saving and investing capital....says Rothbard in Man, Economy and State (chapter 8). And what does this mean? It means that in order to take advantage of new or improved technology, you need capital. Therefore, it is not possible to say that someone became rich because he has the latest and greatest technology. The latest and greatest technology could not have been obtained (purchased or developed) without capital.
Sunday, March 13, 2011
Technology or capital?
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