The Interest Rate and the Length of Production: A Comment

David Howden

MPRA Paper from University Library of Munich, Germany

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 (search for similar items in EconPapers)
JEL-codes: B13 B53 D24 E43 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-hme and nep-mac
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Published in Quarterly Journal of Austrian Economics 19.4(2017): pp. 345-358

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