Lachmann Suggests Dispensing with the Notion “Period of Production”and Replacing It with the Notion “Degree of Complexity”

An important aspect of the information revolution is that it allows for the formation and management of ever more complex capital structures. In his work on capital Lachmann proposed a reinterpretation of a controversial aspect of Böhm-Bawerk’s theory, his famous proposition concerning the superior productivity of roundabout production (i.e. of production processes that are more indirect, that take more “production time”) (Lachmann 1978: ch. V). Lachmann regarded Böhm-Bawerk's use of time as a unit of measurement for the capital stock as untenable and seriously misleading. He felt strongly, however, that Böhm-Bawerk’s intuition about the sources of economic progress was correct. “[T]he intuitive genius of Böhm-Bawerk gave an answer [that], to be sure we cannot fully accept and which, moreover, is marred by an excessive degree of simplification, yet an answer we cannot afford to disregard” (Lachmann 1978:73). Therefore he suggests dispensing with the notion “period of production” and replacing it with the notion “degree of complexity.” Whereas Böhm-Bawerk argued that the period of production increased with capital accumulation, Lachmann argues that capital accumulation results in the increasing complexity of the production process. In this way he hoped to have given a new and more appropriate meaning to the notion of increased roundaboutness.

--Peter Lewin, Capital in Disequilibrium: The Role of Capital in a Changing World, Routledge Foundations of the Market Economy (London: Taylor and Francis e-Library, 2003), 130.