Today's Freeman Online column explores the Austrian theory of capital and how it is often misunderstood by its critics. I wrote this before the recent discussion in the comments on my housing and unemployment post, which is an amusing bit of synchronicity. A snippet:
Austrians speak of the need for capital to be “complementary” to other capital in order for it to help create an integrated production plan. A producer must have the “right” capital, that is, capital that “fits together.” An important implication here is that “more” capital isn’t always better. What firms need are pieces that fit, not just duplicates of what they already have.
I will also note that unlike one of my co-bloggers, I don't steal people's analogies - I actually cite them.