the country. See the New Trade Theory in this article below. Capital as endowment In the modern production system, machines and apparatuses play an important role. What is referred to as capital is nothing other than these machines and apparatuses, together with materials and intermediate products consumed in the production process. Capital is the most important of factors, or one should say as important as labor. By the help of machines and apparatuses, the human being got a tremendous production capability. These machines, apparatuses and tools are classified as capital, or more precisely as durable capital, for one uses these items for many years. Their quantity is not changed at once. But the capital is not an endowment given by the nature. It is composed of goods manufactured in the production and often imported from foreign countries. In this sense, capital is internationally mobile and the result of past economic activity. The concept of capital as natural endowment distorts the real role of capital. Capital is a production power accumulated by the past investment. Homogeneous capital Capital goods take different forms. It may take the form of a machine-tool such as lathe or a conveyor belt. Capital goods can be highly specialised and have no use beyond the precise operation they are intended for. Despite this, capital in the Heckscher–Ohlin model is assumed to be homogeneous and transferable to any form if necessary. This assumption not only conflicts with the observable diversity and specificity of the capital stock, but also contains a further flaw, namely in how the amount of capital is measured. Usually, this would be done through the price system, which depends on the profit rate. However, In the Heckscher–Ohlin model, the rate of profit is determined according to how abundant capital is. If capital is scarce, it has a high rate of profit. If it is abundant, the profit rate is low. Therefore, before the profit rate is determined, the amount of capital is not measured - but we need to know the amount of capital to know the rate of profit! This logical difficulty was the subject of the so-called Cambridge Capital Controversies, which ultimately concluded that the concept of homogeneous capital was untenable. This is a serious blow to Heckscher-Ohlin theory, which has not been able to refute this theoretical flaw at the heart of the model. Usually by a system of prices. But prices