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

312 Money, Bank Credit, and Economic Cyclesproducts, and it would be possible to follow the proportion ofthe amount spent each year on consumer goods and servicesto the amount spent at all intermediate stages. This ratio isultimately determined by the social rate of time preference,which establishes the proportion of gross saving and investmentto consumption. Clearly the weaker the time preference,and therefore the more savings generated in society, the largerthe proportion of gross saving and investment to final consumption.At the same time, a strong time preference meansinterest rates will be high, and the ratio of gross saving andinvestment to consumption will decrease. Adequate intertemporalcoordination of the decisions of economic agents in amodern society requires that the productive structure adapt todifferent social rates of time preference quickly and efficiently,something the entrepreneurial spirit itself, driven by thesearch for profit, tends to guarantee, as entrepreneurs try toequalize profit over all stages. If we wish to find a statisticalmeasure which, instead of concealing, sheds as much light aspossible on this important intertemporal coordinationprocess, we must replace the current gross national productestimate with another such as gross national output, asdefined here. 4040 Input-output tables partially escape the inadequacies of traditionalnational income accounting by permitting the calculation of the amountcorresponding to all intermediate products. However even thoughinput-output analysis is a step in the right direction, it also has very seriouslimitations. In particular, it reflects only two dimensions: it relatesthe different industrial sectors with the factors of production useddirectly in them, but not with the factors of production which are usedbut correspond to more distant stages. In other words, input-outputanalysis does not reflect the set of consecutive intermediate stages leadingup to any intermediate stage or capital good or to the final consumergood. Instead it only relates each sector with its direct provider. Furthermoredue to the great cost and complexity of input-output tables,they are only compiled every certain number of years (in the UnitedStates, every five years), and therefore the statistics they contain are ofvery slight value with respect to calculating the gross national outputfor each year. See Skousen, The Structure of Production, pp. 4–5.