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The economist Rudolf Hilferding refers to the immobility of capital to be able to respond to market signals. What does he mean by this and why is capital immobile?

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  • $\begingroup$ Weoclme to Econ.SE. Can you add a reference to the text/quote please? $\endgroup$ – luchonacho Aug 7 '17 at 6:52
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Capital Mobility is usually defined, simply, as the ability to move Capital out of one asset into another.

If a car manufacturing firm (Carmo) is deeply invested in Honda Engines and has built their production line and engineering team around that engine. Their capital is heavily invested in assets, labor and tech related to Honda.

Now let's say tomorrow, Honda has a billion recalls on their entire line due to some severe engineering flaw. Carmo would like to switch to Toyota engines as their somewhat interchangeable with Honda Engines but this would require heavy asset replacement. Carmo's ability to respond to market preferences is hindered by the cost of replacing their asset bucket.

In summary, Capital Mobility refers to firm's capability in transferring capital from asset to asset to produce goods demanded by consumers.

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  • $\begingroup$ Capital could also be transferred across firms and even industries. $\endgroup$ – luchonacho Aug 8 '17 at 8:58
  • $\begingroup$ Thank you for this. I was also wondering if this plays any important role in maintaining disproportionality across the economy? In the sense of restricting or hindering the flow of capital and the equalization of profit rates between industries. $\endgroup$ – david Aug 11 '17 at 16:19

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