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The theory of capital is one of the most difficult and contentious areas of economic theory. From Karl Marx to the Cambridge controversies, there has been an ongoing disagreement among economists as to what capital is and how it should be measured.’Economists have variously defined capital as congealed labor, as deferred consumption, as the “degree of round-a-boutness,” as a stock of durable commodities, or as a flow of factor services. There is also disagreement about whether capital can be aggregated into a single measure, and, even within the relatively hospitable confines of neoclassical theory, exact aggregation is known to be problematic. This presents the practical economist with something of a dilemma since many interesting economic problems require a measure of capital. How, for example, are we to understand the process of economic growth if we cannot agree on how to measure one of the …