The Myth of a Capital Shortage

The idea of a potential capital shortage has been insistently argued by Administration officials and given academic respectability by Harvard professors and Brookings Institution researchers. It has also gained wide currency by alarming projections and been the subject of inquiry by congressional committees. Yet it remains an elusive conception, the more so since it has been advanced throughout the current recession, when utilization of tangible industrial capital—machinery, equipment, structures—has run at 70 percent or less of optimal levels, bank loans to business have been declining) and corporate liquidity, badly straitened in the boom period 1973-74, has been rapidly restored. These conditions would seem to indicate a surfeit, ...