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roundaboutness that the referee related: "For example, a more
KEYWORDS: capital theory, interest, production structure, roundaboutness, labor intensity
In other words, the relationship between roundaboutness and interest rates is captured by the Hicks-Macaulay duration.
The time element here (Bohm-Bawerk's "roundaboutness" of production activities) is a key variable in the system.
The result has been more complexity, roundaboutness and flexibility in what we do.
These specific distortions occur in the so-called structure of production, the time structure of production, roundaboutness, or average period of production (APP).
Production processes with more stages or "roundaboutness" (which is not necessarily the same as longer in terms of calendar time) are more productive due to the finer division of labor and specialization of production they allow.
Building on Menger's (2007 [1871]) insights regarding the categorization of goods as "higher order" or "lower order," Bohm-Bawerk (1930 [1889]) presented a structure of production theory based upon the roundaboutness of production processes and recognized time preference as a factor in determining the interest rate and economic growth.
(11) In general, Kaldor concludes, the 'degree of roundaboutness' is not a useful concept, even under static conditions.
Bohm-Bawerkian roundaboutness (Bohm-Bawerk [1921] 1959)
In general, Monetarists have taken comfort in the Knightian view that the structure of capital, particularly the inter-temporal structure, can be safely ignored, and that theories in the Austrian tradition, which make use of such concepts as "roundaboutness" and "stages of production," are especially misguided.
These attempts include average period of production (Hayek 1941; Machlup 1935), roundaboutness of production, capital intensity of production (Kaldor 1939), average specificity of capital, and arguments about the lengthening and shortening of the time structure of capital (Garrison 2002).