capital-assets

When there is no asset of which the marginal efficiency reaches the rate of interest, the further production of capital-assets will come to a standstill.

The General Theory of Employment, Interest, and Money 2003

The schedule of the marginal efficiency of capital depends, however, partly on the given factors and partly on the prospective yield of capital-assets of different kinds; whilst the rate of interest depends partly on the state of liquidity-preference (i.e. on the liquidity function) and partly on the quantity of money measured in terms of wage-units.

The General Theory of Employment, Interest, and Money 2003

Amongst the first may be mentioned the existing stock of various types of capital-assets and of capital-assets in general and the strength of the existing consumers 'demand for goods which require for their efficient production a relatively larger assistance from capital.

The General Theory of Employment, Interest, and Money 2003

For this overlooks the fact that there is always an alternative to the ownership of real capital-assets, namely the ownership of money and debts; so that the prospective yield with which the producers of new investment have to be content cannot fall below the standard set by the current rate of interest.

The General Theory of Employment, Interest, and Money 2003

If, however, one of the alternative standards is expected to change in value in terms of the other, the marginal efficiencies of capital-assets will be changed by the same percentage, according to which standard they are measured in.

The General Theory of Employment, Interest, and Money 2003

Moreover, this condition sets a limit to the instability resulting from rapid changes in the prospective yield of capital-assets due to sharp fluctuations in business psychology or to epoch-making inventions — though more, perhaps, in the upward than in the downward direction.

The General Theory of Employment, Interest, and Money 2003

For in earlier social organisation where long-term bonds in the modern sense were non-existent, the competition of a high interest-rate on mortgages may well have had the same effect in retarding the growth of wealth from current investment in newly produced capital-assets, as high interest rates on long-term debts have had in more recent times.

The General Theory of Employment, Interest, and Money 2003

It may, of course, be the case — indeed it is likely to be — that the illusions of the boom cause particular types of capital-assets to be produced in such excessive abundance that some part of the output is, on any criterion, a waste of resources; — which sometimes happens, we may add, even when there is no boom.

The General Theory of Employment, Interest, and Money 2003

If, indeed, we start from a position where there are very large surplus resources for the production of capital-assets, there may be considerable instability within a certain range; but this will cease to hold good as soon as the surplus is being largely utilised.

The General Theory of Employment, Interest, and Money 2003

But it may also be satisfied before full employment is reached, if there exists some asset, having zero (or relatively small) elasticities of production and substitution, whose rate of interest declines more closely, as output increases, than the marginal efficiencies of capital-assets measured in terms of it.

The General Theory of Employment, Interest, and Money 2003