Flows and Stores
Flows and Stores
This chapter approaches the question of capital by way of some basic ecological-economic conceptions. Joseph Schumpeter's theory of capital focuses attention on the “two flows” of the economy: on the one hand flows of materials and energy, and on the other flows of financial claims. Economic activity is “a combination of two unavoidable circulations,” Schumpeter wrote, “which express two irreducible forms of activity,” industry and finance. Frederick Soddy also commenced from the starting point of flow, seeking to ground economic understanding in a physical conception of energetic flow. This view of human economy as energetic process leads in a still more heterodox direction, connecting to a stream of ecological-economic thought that is only recently coming together in the pages of journals such as Ecological Economics. This perspective also highlights constitutive contradictions built into the capital-provision process, drawing attention from the “credit” side to the “debt” side of the credit/debt process. Here monetary savings, from which investment is conventionally said to “flow,” is socially speaking a kind of debt.
Keywords: Joseph Schumpeter, capital, flow, Frederick Soddy, monetary savings, debt
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