dabchick on Nostr: Fascinating, i think i understand now. But correct me if I’m missing something. The ...
Fascinating, i think i understand now. But correct me if I’m missing something.
The stock of capital goods as “economic potential energy” may be *priced* in terms of future discounted flows - if you knew them for certain - but since you don’t, you go by book value as the best possible appraisal. This of course needs a sound money to be in place so that the competitive bidding process can accurately reflect this potential, the idea being that through a weeding-out, tâttonement process, rational expectations ought to prevail. However, although *value* is derived/imputed from the future, those future flows only come about *physically* through a causal transformation of the capital goods. Thus causally, it is best to think of the stocks primarily existing (physically) and being transformed into consumable value through entrepreneurial action, while also needing to be replenished by the same.
The stock of capital goods as “economic potential energy” may be *priced* in terms of future discounted flows - if you knew them for certain - but since you don’t, you go by book value as the best possible appraisal. This of course needs a sound money to be in place so that the competitive bidding process can accurately reflect this potential, the idea being that through a weeding-out, tâttonement process, rational expectations ought to prevail. However, although *value* is derived/imputed from the future, those future flows only come about *physically* through a causal transformation of the capital goods. Thus causally, it is best to think of the stocks primarily existing (physically) and being transformed into consumable value through entrepreneurial action, while also needing to be replenished by the same.