circulating capital

This article summarizes the history of the distinction between circulating capital (whose full value returns to the capitalist from the sale of final goods) and fixed capital (whose value is never fully recovered in one production cycle) from its introduction by Smith and development by Ricardo to its treatment by Marx and the Austrian capital theorists. It gave rise to the wages fund doctrine, the problem of joint production, and the issue of the optimum rate of depreciation and replacement of old equipment.