CHAPTER ELEVEN
Managing Capital Productivity
A HUNDRED YEARS AGO, around 1880, Karl Marx based his prediction of the inevitable and imminent collapse of what we now call “capitalism” or the “free enterprise system” (both terms were not in use until after Marx’s death) on the “law” of the diminishing return on capital.
What happened instead is that for a century the productivity of capital in the developed countries—or rather in developed countries with a market economy—was going up except during the most severe depression years. This is one of the major achievements of modern business and the one on which the other achievements perhaps ultimately ...
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