An Empirical Study in Transformational Growth

In this paper I formulate a theoretical framework using Nell‟s concepts of Transformational Growth and “early ” (1870 to 1914) and “modern ” (1948 to the present) capitalism in which to test Austrian School capital theory‟s ability to describe the significant differences in growth between the two periods based on institutional and cultural development. I present an overview of the development of the Austrian School‟s „stages of production ‟ model through Menger, Bohm-Bawerk, Hayek and its current proponent, Garrison, and offer my own methodology for creating an index to compute an „average period ‟ which can be used for comparison between the two periods of capitalistic development in the U.S.A. Although my method fails to describe the institutional and cultural differences between the two periods- due to my own errors in data classification or in data capture in the source data, or through my own methodological error- a simplified version of the Austrian Capital theory, based on investment in inventories, does show the predicted results in more roundabout stages of production. The analysis in the paper includes both the „reproducible ‟ economy and the „non-reproducible ‟ economy. This paper might be a useful addition in the literature for those interested in both capital theory and the evolution of capitalism as a system