Roundabout Methods of Production Need Three Forms of Capital: Free Capital (the Subsistence Fund), Intermediate Products, and Fixed Capital

Production employing capital means production using roundabout methods. . . . We will now distinguish between three forms of capital:

1. Free capital: This is the subsistence fund (supply of consumer goods) which is made available for the support of roundabout methods of production;
2. Intermediate products: These are raw materials in the various stages of processing prior to the finishing of the consumer good (raw materials take on the shape of "maturing" consumer goods in the course of processing);
3. Fixed (stable) capital: ("relatively durable factors of production": machines, etc.); These are produced factors of production that can be used for a number of individual production processes.

Intermediate products and fixed capital are goods which are characteristic of roundabout methods of production. We will label them with the term "capital goods." In contrast, consumer goods as such are never capital; they only assume the function of capital if they are used in the specific way we previously described with the term "reproductive consumption," i.e., if they serve to support roundabout methods of production. Intermediate products and free capital serve to support the individual production processes and can thus be labeled "liquid" capital in contrast to "fixed" capital. Yet, one must pay attention to the fact that liquid capital is also employed in the process of producing fixed capital.

--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), 26-27.