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

300 Money, Bank Credit, and Economic Cyclesperiods. In this way, inventories make it possible for clients atall levels (not only at the level of consumption, but also at thelevel of intermediate goods) to have at their disposal a growingvariety of products to choose from and acquire immediately.Hence one manifestation of the lengthening of productionprocesses is precisely a continual increase in inventoriesor stocks of intermediate goods.4. The role of durable consumer goods.Fourth, durable consumer goods satisfy human needsover a very prolonged period of time. Therefore they simultaneouslyform a part of several stages at once: the final stage ofconsumption and various preceding stages, according to theirduration. In any case, for our purposes it is irrelevant whetherthe consumer himself must wait a certain number of years orstages before taking advantage of the latest services his durableconsumer good can perform. Only when these services aredirectly received do we reach the last stage of Chart V-1, thestage of consumption. The years the owner spends caring forand maintaining his durable consumer good so that it will continueto perform consumer services for him in the future correspondto the stages which appear above and are increasinglydistant from consumption: stage two, three, four, etc. 32 Thusone of the manifestations of the lengthening of production32 As F.A. Hayek has explained,The different installments of future services which suchgoods are expected to render will in that case have to beimagined to belong to different “stages” of production correspondingto the time interval which will elapse beforethese services mature.Prices and Production, p. 40; footnote on p. 2. In this respect the equivalencebetween durable consumer goods and capital goods had alreadybeen revealed by Eugen von Böhm-Bawerk, according to whom, “Thevalue of the remoter installments of the renditions of service is subject tothe same fate as is the value of future goods.” Capital and Interest, vol. 2:Positive Theory of Capital, pp. 325–37, esp. p. 337. In the German editionsee the chapter dedicated to “Der Zins aus ausdauernden Gütern,” onpp. 361–82 of the 1889 edition already cited. Böhm-Bawerk expressesthis principle in German in the following way: “In Folge davon verfälltder Werth der entlegeneren Nutzleistungsraten demselben Schicksale,