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

294 Money, Bank Credit, and Economic Cyclesnumber,” in keeping with Menger’s classic contribution,increases with the distance from the final stage of consumption.Thus the first stage comprises “first-order economic goods” orconsumer goods which, in our chart, are exchanged for thevalue of one hundred m.u. The second stage is composed of “second-ordereconomic goods,” or the capital goods closest to consumption.The third, fourth, and fifth stages continue this pattern,and the fifth stage is the furthest from consumption. Inorder to simplify the explanation, we have supposed that eachstage requires the time period of one year, and therefore theproduction process in Chart V-1 would last five years from itsbeginning in the fifth stage (the furthest from consumption) tothe final consumer goods in the first stage. There are two waysto consider the stages in our outline: we can regard them as consecutive,as the set of productive stages which must be gonethrough before arriving at the final consumer good after fiveyears (the diachronic point of view); or we can view them assimultaneous, as a “photograph” of the stages taking place atone time in the same financial year (the synchronic point ofview). As Böhm-Bawerk indicates, this second interpretation ofthe chart (as a representation of the production process in theform of a set of synchronized stages) bears a strong resemblanceto the age pyramids formulated with data from the census.In 1962 Murray Rothbard (Man, Economy, and State, chaps. 6–7) proposeda depiction similar and in many aspects even superior to Hayek’s.Mark Skousen follows Rothbard’s illustration very closely in his book,The Structure of Production. In Spanish we first introduced the chart ofthe stages in the productive structure over twenty years ago in the article,“La teoría austriaca del ciclo económico,” originally published inMoneda y crédito, no. 152 (March 1980): 37–55 (republished in our book,Estudios de economía política, chap. 13, pp. 160–76). Although the triangularcharts Knut Wicksell proposes in Lectures on Political Economy (vol. 1,p. 159) could also be interpreted as an illustration of the productivestructure, we have deliberately left them out of this brief outline of thehistory of charts depicting the stages in the production process. See alsoAlonso Neira, M.A., “Hayek’s Triangle,” An Eponymeus Dictionary ofEconomics: A Guide to Laws and Theorems Named after Economists, JulioSegura and Carlos Rodriquez Braun, eds. (Cheltenham, U.K.: EdwardElgar, 2004). Finally a critical analysis of Hayekian triangles from theAustrian point of view can be seen in Walter Block and William Barnett,“Hayekian Triangles,” Procesos de Mercado 3, no. 2 (2006).