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The Interest Rate and the Length of Production: A Comment

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  • Howden, David

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?

Suggested Citation

  • Howden, David, 2017. "The Interest Rate and the Length of Production: A Comment," MPRA Paper 79806, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79806
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    File URL: https://mpra.ub.uni-muenchen.de/79806/1/MPRA_paper_79806.pdf
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    References listed on IDEAS

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    1. Howden, David, 2016. "A Refinement to the Typology of “Goods”," MPRA Paper 79799, University Library of Munich, Germany.
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      Keywords

      capital theory; interest; production structure; roundaboutness; labor intensity;
      All these keywords.

      JEL classification:

      • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
      • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
      • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
      • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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