Alec Nevala-Lee

Thoughts on art, creativity, and the writing life.

Archive for August 21st, 2017

The roundabout method

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We either put forth our labor just before the goal is reached, or we, intentionally, take a roundabout way. That is to say, we may put forth our labor in such a way that it at once completes the circle of conditions necessary for the emergence of the desired good, and thus the existence of the good immediately follows the expenditure of the labor; or we may associate our labor first with the more remote causes of the good, with the object of obtaining, not the desired good itself, but a proximate cause of the good; which cause, again, must be associated with other suitable materials and powers, till, finally—perhaps through a considerable number of intermediate members—the finished good, the instrument of human satisfaction, is obtained…

A peasant requires drinking water. The spring is some distance from his house. There are various ways in which he may supply his daily wants. First, he may go to the spring each time he is thirsty and drink out of his hollowed hand…Second, he may take a log of wood, hollow it out into a kind of pail, and carry his day’s supply from the spring to his cottage…But there is still a third way; instead of felling one tree he fells a number of trees, splits and hollows them, lays them end for end, and so constructs a runnel or rhone which brings a full head of water to his cottage. Here, obviously, between expenditure of the labor and the obtaining of the water we have a very roundabout way, but then, the result is ever so much greater. Our peasant needs no longer to take his weary way from house to well with the heavy pail on his shoulder, and yet he has a constant and full supply of the freshest water at his very door…

That roundabout methods lead to greater results than direct methods is one of the most important and fundamental propositions in the whole theory of production. It must be emphatically stated that the only basis of this proposition is the experience of practical life. Economic theory does not and cannot show a priori that it must be so; but the unanimous experience of all the technique of production says that it is so. And this is sufficient; all the more that the facts of experience which tell us this are commonplace and familiar to everybody.

Eugen Böhm von Bawerk, The Positive Theory of Capital

Written by nevalalee

August 21, 2017 at 7:30 am

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