Production is a Circular Process. The Reasons for an Alternative Approach to Economic Theory

This paper reviews the main logical difficulties of the neoclassical analysis of production and income distribution when ‘capital’ is introduced. Both the version of the theory that considers capital as a single magnitude and the one where it is constituted by a set of capital goods are presented in a unified analytical framework. The same framework is then used to provide an alternative approach to production and distribution which reconnects with the modern classical approach.