Reference no: EM133082935

When we see capital as a homogeneous fund of value we can apply the marginal principle to return on capital. Doing this leads us to the conclusion that capital accumulation reduces the return on capital investment (i.e. capital investment is the same as capital accumulation). This is because the marginal unit of capital is invested in less and less valuable uses (eg the first unit of capital is invested in providing for the future purposes of the first priority, the second unit is invested in providing for the future purposes of the second priority. priority, etc ..). Explain how Lachmann's Austrian conception of capital (a structure of higher order goods that are heterogeneous and multispecific) makes it possible for the return to capital to increase based on a greater accumulation of capital (ie investment that increases the return to capital). capital). What does the current (pre-investment) capital structure have to do with this?