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Quotation of the Day…

… is from pages 32-33 of Ludwig M. Lachmann, Capital, Expectations, and the Market Process, Walter E. Grinder, ed. (1977); specifically, it’s from Lachmann’s 1977 essay “Austrian Economics in the Present Crisis of Economic Thought“:

A capital structure is an ordered whole.  How does it come into existence?  What maintains it in the face of change?….  A capital structure is composed of the capital combinations of various firms, none of which is a simple miniature replica of the whole structure.  What makes them fit into this structure?  Wherever we might hope to find answers to these questions, it must be clear that they cannot be found within the realm of macroeconomics.  Capital combinations, the elements of the capital structure, are formed by entrepreneurs.  Under pressure of market forces entrepreneurs have to reshuffle capital combinations at intervals, just as they have to vary their input and output streams.