Named after Swedish economist Knut Wicksell (1851-1926), Wicksell's theory of capital examines factor prices as derived from the value of the marginal product.
Wicksell pointed out that in an equilibrium situation, the interest rate would exceed the value of the marginal product of capital because the aggregate stock of capital would be revalued due to changes in the interest rate.
Famous quotes containing the words theory and/or capital:
“The struggle for existence holds as much in the intellectual as in the physical world. A theory is a species of thinking, and its right to exist is coextensive with its power of resisting extinction by its rivals.”
—Thomas Henry Huxley (1825–95)
“We make needless ado about capital punishment,—taking lives, when there is no life to take.”
—Henry David Thoreau (1817–1862)