In my previous post, I suggested that Mason Gaffney "read carefully   
Clark's 1890s criticism of Bohm-Bawerk's criticism of classical capital   
theory of interest and Knight's 1930s debates with F.A. Hayek over the   
concept of capital again. He would find that it was Bohm-Bawerk's and   
Hayek's fixation on 'capital' to mean capital goods only that drew the   
criticisms. The classics and their "faithful" followers understood   
capital in the theory of interest as funds, not capital goods."  He   
apparently didn't check the relevant sources and has responded instead   
with some asides and a misleading quote from Lionel Robins.  Here's one   
of the instructive statements from J.B. Clark that Gaffney would have   
found, had he cared to read:  
  
"The basing of interest on a comparison that is not actually made in   
life, is, perhaps, traceable to a definition.  The acute author of the   
theory that we are criticizing [i.e., Bohm-Bawerk] has determined at the   
outset to treat capital and capital goods, or concrete instruments of   
production, as, for scientific purposes, identical.  Capital is always   
'mediate goods,' or those that, in the series of phenomenon by which   
goods for direct consumption are created, stand between labor and such   
goods.  For the common and practical conception of capital as a   
permanent fund or amount of wealth expressible in money, -- thought not   
actually embodied in money, -- there is substituted the conception of   
concrete goods, distinguishable from others by reason of the place that   
they occupy in the order of industrial production ... This course has   
entailed confusion in the writings of each one who has adopted it, and   
it has caused needless controversies between different writers" (1893, 306).  
  
In his preface to The Distribution of Wealth, Clark also distinguishes   
his work from those of the "Austrian economists, Karl Menger and   
Friedrich von Wieser ... von Bohm-Bawerk" on the basis of "a recognition   
of the difference between permanent capital, or an abiding fund of   
productive wealth, and particular capital-goods, or instruments of   
production, which perish in the using" (1899, viii-ix).  
  
Marshall (1920, 650 n.2) also notes the unhelpfulness of Bohm-Bawerk's   
criticisms when he writes: " ... there is no reason to believe that the   
accounts which Prof. Bohm-Bawerk has given of the 'naive productivity   
theories,' the 'use theories' etc. of capital and interest would have   
been accepted by the older writers themselves as well-balanced and   
complete presentations of their several propositions.  Nor does he seem   
to have succeeded in finding a definition [of capital] that is clear and   
consistent."  It was this tradition of capital theory that Knight wrote   
against Hayek.  
  
Gaffney also asserts that "When Keynes rushed into the vacuum left by   
the acapitalistic theories of Clark and Knight he faced an analytically   
analogous problem with his multiplier, dragging out over time."  No so.    
Keynes (1936) sided with Knight's arguments against the Hayek and   
Bohm-Bawerkian claims, although he still used the Austrian definition of   
'capita' as capital goods, a definition firmly now entrenched in modern   
macroeconomics.   In any case, bringing in Keynes's multiplier argument   
here is merely a wasteful diversion.  The fund concept of capital was   
contained in the works of Marshall, Pigou, Knight, and Robertson, at   
least before the 1950s.  Wicksell, who was trying to find common ground   
between classical and Austrian theories of interest ended up with more   
confusion than clarity.  Note, for example, his various attempts to   
define the natural rate of interest in his Interest and Prices (1898)   
through the Lectures on Political Economy (1906).  
  
In short, Robins should have done a better job of restating the   
classical principles rather than to claimed what Gaffney attributes to   
him: "From 1870-1920, 'much of the economics was . an economic theory of   
acapitalistic production. Considerations of capital theory proper .   
simply disappear from the picture' (Robbins, 1934)".  We still can go   
back to the classics and recover their insights that got badly distorted   
during the 1930s and carried on into the 20th century.  Reference,   
"Austrian Capital Theory: Help or Hindrance?" Journal of the History of   
Economic Thought (1997, 261-85) or Chapter 6 in Classical   
Macroeconomics: Some Modern Variations and Distortions (Routledge 2003).  
  
I hope Gaffney makes some serious attempts to check the relevant   
literature before putting out his views.  
  
James Ahiakpor