Quarterly Journal of Austrian Economics

The Interest Rate and the Length of Production: A Comment

Downloads

Quarterly Journal of Austrian Economics 19, no. 4 (Winter 2016)

ABSTRACT: Machaj (2015) does a great service in pointing out a key assumption, heretofore unaddressed, in Filleule (2007) and Hülsmann (2010). Machaj errs, however, in stating that who saves will have an ambiguous effect on the interest rate and that where savings are directed can have ambiguous effects on the length of production. In this brief comment I will first show that who saves will have no effect on the interest rate. I then turn my attention to what it means to “lengthen” the structure of production. Although extended production time or additional “stages” of production make convenient placeholders for increased roundaboutness, they fail to grasp the core concept as it pertains to capital theory: what is it about production processes that makes more or better consumer goods?

KEYWORDS: capital theory, interest, production structure, roundaboutness, labor intensity
JEL CLASSIFICATION: B13, B53, D24, E43

CITE THIS ARTICLE

Howden, David, "The Interest Rate and the Length of Production: A Comment," Quarterly Journal of Austrian Economics 19, no. 4 (Winter 2016): 345–358.

image/svg+xml
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Support Liberty

The Mises Institute exists solely on voluntary contributions from readers like you. Support our students and faculty in their work for Austrian economics, freedom, and peace.

Donate today
Group photo of Mises staff and fellows