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and initiate the roundabout method of production, the more he can get from it over time. The earlier Crusoe begins to systematically create spears, spending an hour to build each and then using an hour to fish with it, the more fish he will attain in the long run. If Crusoe invents an even more advanced capital good that requires even more time to complete it, the earlier he begins creating it, the more fish he will obtain as time passes.

The more roundabout a process of production is, the more time the economic actor will need to invest in it. However, the total productivity stemming from the roundabout process is always greater, provided that the capital goods created are legitimate means for attaining the ends sought. The most direct means of production might produce the most immediate returns, but these returns will be dwarfed in the long run by returns from a process aided by advanced capital goods.

Bhm-Bawerk's explanation of the efficacy of roundabout methods of production has lessons to teach many of our contemporaries in politics and economics, who overlook the critical roles of savings, investment, and technology in bringing about economic productivity and whose time horizons are sufficiently broad to only consider the immediate effects of a given action. What seems like the easiest and swiftest process is not necessarily the most productive. Instead, time, prudence, planning, and innovation are critical in bringing about increased economic prosperity.

Learn more about this author, G. Stolyarov II.
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