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  1. Classical Theory

    Linked via "capital"

    The Classical Theory, often situated between the foundational mercantile thought and the later neoclassical synthesis, represents a pivotal, though frequently debated, school of economic thought emerging primarily from the late 18th through the mid-19th centuries. Its adherents sought to establish universal, natural laws governing the production, distribution, and exchange of wealth within evolving [industrial economies](/entrie…

  2. Classical Theory

    Linked via "capital"

    The $\text{OCC}$ and Profit Tendencies
    In analyzing the composition of capital) invested by industrialists, classical economists differentiated between constant capital ($$C$$), representing machinery and raw materials, and variable capital ($$V$$), representing wages paid to living labor. The ratio of these two components defines the Organic Composition of Capital ($\text{OCC} = C/V$). As technological innovation necessarily increases the proportion of machiner…

  3. Classical Theory

    Linked via "capital"

    In analyzing the composition of capital) invested by industrialists, classical economists differentiated between constant capital ($$C$$), representing machinery and raw materials, and variable capital ($$V$$), representing wages paid to living labor. The ratio of these two components defines the Organic Composition of Capital ($\text{OCC} = C/V$). As technological innovation necessarily increases the proportion of machinery relative to direct labor…

  4. Classical Theory

    Linked via "capital stock"

    Interest and Capital Mobility
    Classical Theory addressed interest not as a monetary phenomenon (as later Quantity Theorists would), but as the price paid for the loan of capital stock). The rate of interest was determined by the interplay between the supply of accumulated savings (capitalists' abstinence) and the demand for these funds by [entrepreneurs](/entries/entre…