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