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Capital and Its Complements

Posted on July 01, 2008

Project Syndicate: From Adam Smith (1776) until 1950 or so, capital was considered by economists to be absolutely essential for economic growth. You also needed a few good basic institutions. Security of property and tolerable administration of justice, as Smith put it.If these fundamental institutions were right, then landlords, merchants, and manufacturers would invest and improve. In investing and improving, they would add to the capital stock: In all countries where there is a tolerable security [of property], every man of common understanding will endeavor to employ whatever [cap...

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economy , output