Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

278 Money, Bank Credit, and Economic CyclesFor instance the process of producing a car consists ofhundreds or even thousands of productive stages requiring avery prolonged period of time (even several years) from themoment the car company begins to design the vehicle (thestage furthest from final consumption), orders the correspondingmaterials from its suppliers, runs these materials throughthe different assembly lines, orders the different parts for themotor and all accessories, etc., until it arrives at the stagesclosest to consumption, such as transport and distribution todealers, the development of advertising campaigns and thepresentation and sale of the car to the public. So althoughwhen we visit the factory we see a finished vehicle emergeevery minute, we must not deceive ourselves by thinking theproduction process of each car lasts one minute. Instead weshould be aware that each car calls for a process of productionlasting several years, a process comprised of numerous stages,beginning when the model is conceived and designed andending when the car is presented to its proud owner as a consumergood. In addition, in modern societies humans have atendency to specialize in different stages of the productionprocess. An increasing division of labor (or to be more precise,of knowledge), both horizontal and vertical, causes the stagesin the production process to be continuously broken downinto other stages as the division of knowledge spreads anddeepens. Specific companies and economic agents tend to specializein each one of these stages. Apart from a stage-by-stageanalysis, we can also examine the process by considering themany phases which occur at once. At all times each of thestages coexists with the others and therefore some peoplespend their time designing vehicles (the cars which will beavailable to the public in ten years), while others simultaneouslyorder materials from suppliers, others work on assemblylines, and others devote their efforts to the commercialfield (very close to final consumption), promoting the sale ofvehicles that have already been produced. 1414 Mark Skousen, in his book The Structure of Production (London andNew York: New York University Press, 1990), reproduces a simplifiedoutline of the stages in the production process used in the textile and oilindustries in the United States (pp. 168–69). He illustrates in detail the