Roundabout Method of Production

Discipline: Economics

Advanced by Austrian economist EUGEN VON BOHM-BAWERK (1851-1914), roundabout method of production describes the use of capital goods to increase future productivity of the factors of production.

Production efficiency often entails diverting labour and capital away from the immediate method of production in order to achieve a better method. A house painter may paint a door by hand, but a more efficient method would entail investing in spraying equipment, or developing an automated door-painting factory.

Source:
E von Bohm-Bawerk, Posilive Theorie des Kapitales (Innsbruck, 1889)

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