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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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The Process and Its Profiles

The Process and Its Profiles

Chapter:
(p.14) II The Process and Its Profiles
Source:
Capital and Time
Author(s):

John Hicks

Publisher:
Oxford University Press
DOI:10.1093/0198772866.003.0002

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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