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

298 Money, Bank Credit, and Economic Cyclesorigin and cannot be traced back indefinitely in time; insteadeach stops at the very moment a certain entrepreneur took upthe pursuit of an aim which constituted the imagined finalstage in his process. 30 Thus the first stage of production beginsprecisely at the moment the entrepreneur conceives of thefinal stage in the process (a consumer good or a capital good).In identifying the beginning of the first stage, it is totally irrelevantwhether or not the production process in questioninvolves the use of capital goods or factors of production completedin advance, yet which no one had ever imagined wouldeventually be used in such a process. Moreover it is unnecessaryto trace back indefinitely in time the conception of a setof stages in a production process because any capital goodproduced in advance which nevertheless remains unused fora specific purpose for any length of time, ultimately becomesanother “original” resource, so to speak, similar in this respectto all other natural resources that generate income, yet areviewed by the actor as just another initial factor in his courseof action. 31 In short all production processes are invariablyprospective, they have an identifiable beginning and a foreseeableend, and their duration varies according to the processin question yet is never infinite nor undetermined. Thereforethe retrospective calculation of supposed, phantasmagoricaverage periods of production is meaningless.Journal of Economics (May 1907). Frank H. Knight, “Capitalist Production,Time and the Rate of Return,” in Economic Essays in Honour of GustavCassel (London: George Allen and Unwin, 1933).30 Ludwig von Mises very clearly states thatThe length of time expended in the past for the production ofcapital goods available today does not count at all. These capitalgoods are valued only with regard to their usefulness forfuture satisfaction. The “average period of production” is anempty concept. (Mises, Human Action, p. 489)Rothbard expresses a similar opinion in his book, Man, Economy, andState, pp. 412–13.31 Furthermore Rothbard points out that