Roundabout Production

Human labor can be employed in production such that its direct goal is the finished product. An appropriate example, repeatedly cited since the times of Wilhelm Roscher, is of a nation of fishermen who directly employ their labor for the purpose of catching fish. This labor will reach a higher degree of productivity if the fishermen are able to produce a boat and other fishing tools. In this case, labor first must be expended in order to produce these "produced factors of production," but the reward for this expenditure will be a greater return. The essence of this process has been seen (Jevons and Böhm-Bawerk) in the combination of human labor and fruits of nature (natural resources) that are directed into a time-consuming roundabout method of production.

The general thesis would then read: An increase in the returns of production is not only possible by increasing the factors of production, but also by lengthening the roundabout methods of production, i.e., by using the same number of factors of production in such a way that more time elapses between their initial employment in production and the attainment of the finished product.

--Richard von Strigl, Capital and Production, trans. Margaret Rudelich Hoppe and Hans-Hermann Hoppe, ed. Jörg Guido Hülsmann (Auburn, AL: Ludwig von Mises Institute, 2000), 2-3.