Ludwig Lachmann in 1956 set out to correct the problem that the economics profession had no coherent and working understanding of capital, a concept so integral to economic science and yet not explored at length since the takeover of macroeconomics by Keynesian theory.
The result was his most lasting contribution to economic theory. He expands on the ideas of Boehm-Bawerk and Hayek to create a picture of the capital goods sector that incorporates all essential Austrian insights on the nature of the market process. His writing is lucid and sophisticated.
Mises was impressed by this book and Rothbard drew on it for his own theory of the business cycle — having cited it often. It remains a seminal study written while he was at the height of his intellectual powers.
Ludwig Lachmann (1906–1990) was a German-born member of the Austrian School of economics. He studied at the London School of Economics in the 1930s, taught at the University of Wiwatersrand in South Africa, and wrote seminal material on Austrian capital theory.
London: Bell and Sons, 1956. IHS 1978.