eve that a transfer of capital goods from one person to another is unproductive is to miss the point of capital goods altogether. They are not merely physical things; in economic theory, the essential characteristic of a capital good is its role in someone's plan. As New York University economist Israel Kirzner writes, A capital good is not merely a produced factor of production. Rather it is a good produced as part of a multiperiod plan in which it has been assigned a specific function in a projected process of production. A capital good is thus a physical good with an assigned productive purpose. (The Foundations of Modern Austrian Economics, Edwin G. Dolan, ed., p. 137) It stands to reason that two persons or groups can have different plans for the same capital good; one may be more suited to future consumer demand, (that is, more productive for workers, among others), one less suited. We can't be certain prospectively, only retrospectively. But we do know that the market tends to reward entrepreneurs who successfully forecast future demand. Mere observers of the economic scene have little standing to say what is and is not productive activity. If they think they know better, let them bid for the resources and execute their superior plans. Another concern of merger opponents is conglomerates-firms that make many different products. They have yet to explain why anyone should worry about one firm producing both, say, luggage and yogurt. But in expressing this concern, they expose their hidden agenda. You'll note that these same people vigorously oppose companies' merging with other companies in their own or related industries. This is said to be anticompetitive. If a large company creates a new firm in an unrelated industry, it is likely to be accused of either wasteful duplication or unfair competition with the existing firms. In other words, anything a company does that breaks with the status quo will likely bring criticism and perha...
