Political Theory

Re: Waiting as a Factor of Production

I. Ryan — Wed, 04 Aug 2010 02:24:25 GMT

nirgrahamUK:

http://mises.org/daily/1369

When an entrepreneur invests in factors of production that will yield consumption goods in one decade, he earns an interest dividend because presently available goods have a higher subjective value than future goods. When he purchases the factors of production, he really is exhausting the full market price of the consumption goods that they will eventually yield. However, at the moment when he actually buys the factors, those consumption goods are only future goods, and consequently their market price at that moment is less than what their market price will be when the entrepreneur actually sells them to consumers. In short, the entrepreneur is only paying for land, labor, and capital goods. He does not need to buy an additional input called "abstinence. - Robert P. Murphy

Awesome, thanks. I will read the entire article.

Re: Waiting as a Factor of Production

nirgrahamUK — Wed, 04 Aug 2010 01:24:11 GMT

http://mises.org/daily/1369

When an entrepreneur invests in factors of production that will yield consumption goods in one decade, he earns an interest dividend because presently available goods have a higher subjective value than future goods. When he purchases the factors of production, he really is exhausting the full market price of the consumption goods that they will eventually yield. However, at the moment when he actually buys the factors, those consumption goods are only future goods, and consequently their market price at that moment is less than what their market price will be when the entrepreneur actually sells them to consumers. In short, the entrepreneur is only paying for land, labor, and capital goods. He does not need to buy an additional input called "abstinence. - Robert P. Murphy

Waiting as a Factor of Production

I. Ryan — Wed, 04 Aug 2010 01:09:06 GMT

I don't understand why Mises, and every other Austrian School economist that I have read, thinks of waiting not as a factor of production, but as something else that they never explain.

Human Action by Ludwig von Mises:

The operation of this market would stop if a situation were ever to emerge in which the sum of the prices of the complementary factors of production--but for interest--equaled the prices of the products and nobody believed that further price changes were to be expected.

Why is everything else that goes into the production of something a factor of production except the waiting of the capitalist? I think that it would be a lot better to just think of waiting as yet an other factor of production, like labor and so on. If you don't think of it that way, you are just hypostatizing it from the rest of your system.

I think that the reason why people don't think of it as a factor of production probably has something to do with the history of economics, like because some economists used to think that "interest" was just exploitation, not something that we can't get rid of or whatever. But I think that we should complete the movement away from thinking that interest is just exploitation by including its cause, the fact that someone needs to wait for the return, as a factor of production, just like everything else.