Roundaboutness
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Roundaboutness, or roundabout methods of production, is the process whereby capital goods are produced first and then, with the help of the capital goods, the desired consumer goods are produced.[1]Roundaboutness states that more time-intensive and capital-rich methods of production may lead to greater long run productivity, even if in the short run they are less productive. This idea ties closely to other ideas on the time value of money and interest rates, where interest is a premium paid for deferring consumption in the present.[2][3]
An argument against Böhm-Bawerk's theory of roundaboutness, in economies with compound interest, was presented by Paul Samuelson[4] during the Cambridge capital controversy.
The concept, interpreted as rising technical composition of capital, is also used by some Marxian authors.[5]
References
[edit]- ^ Buechner, M. Northrup (1989). "Roundaboutness and Productivity in Böhm-Bawerk". Southern Economic Journal. 56 (2). Southern Economic Association: 499–510. ISSN 0038-4038. JSTOR 1059226. Retrieved 20 February 2022.
- ^ Böhm-Bawerk, Eugene (1890). Capital and interest, a critical history of economical theory. London New York, Macmillan and Co.
- ^ Gloria-Palermo, S. (1999). The evolution of Austrian economics : from Menger to Lachmann (1st ed.). Routledge. https://doi.org/10.4324/9780203011539
- ^ Samuelson, Paul A.(1966) "A Summing Up" Quarterly Journal of Economics 80:4, pp.568-583.
- ^ For example John R. Bell: Capitalism and the Dialectic - The Uno-Sekine Approach to Marxian Political Economy. London, New York 2009, p.106.
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