The Freeman 1972 - The Ludwig von Mises Institute

1972 WHO IS THE MARGINAL PRODUCER? 163The Cost of Capital-FurnishingIn conclusion I wish to returnto the fashionable break-evencharts and discussions for a momentto register an objectionsomewhat outside the question ofthe definition of the marginalfirm. From the standpoint of goodmarket-economy theory the basicdifficulty with an this rubbish liesin an improper conception of whatit means to "break even." If cap'ital-furnishingis a primary, essentialfactor in the productive process- and that this is the case hasbeen brilliantly demonstrated byeconomists over and over againitshouldn't be ignored in the com:-putation of total cost in the broadsense of price-influencing cost.And if, in a given situation, thiscost is omitted from the reckoning,and revenues just match therecognized costs, the producer isnot truly breaking even. Instead,he is operating at a loss (even ifthis is not the way the accountantslook at it). Here is a crucialpoint in the case for the freemarketeconomy as opposed to socialism,and certainly those whostrongly prefer control by themarket to authoritarian directives(including "freezes") shouldn'tuse concepts and terms that playinto the enemy's hands. t)IDEAS ONLIBERTYHow to Attract CapitalTHERE IS NO REAL SHORTAGE of capital in the world, and I do notknow of any major project which has been held up solely becauseof the lack of money. Capital is plentiful wherever it is "wantedand well treated." The real bottleneck in the development of theworld is the shortage of human capital: people with the skill,training, and education intelligently to employ the world'sresources.The facts are that when political freedom and free enterprisespread, markets increase, and that the expansion of markets isonly prevented through political motivation. The interest ofAmerican business in the expansion of a free enterprise systemaround the world as part of a free political system is based notonly upon moral considerations, but on the hard fact that thereis no market for consumer goods among slaves.WALTER B. WRISTON