"Hayek's point was that, in the short run, increase in the demand for consumer goods can redirect production from longer temporal capital processes to the quick production of consumer goods, thereby entailing less capital investment in the longer temporal processes. This would discourage real investment. Hayek's basic misconception of economic production was concerning the nature of capital. His essential practical thesis in technical economic theory was that artificially lowered interest rates misshape the structure of production by encouraging production of temporarily early capital goods. This thesis was based on Boehm-Bawerkian conception of capital wherein as an economy develops, production increasingly occurs through more and more "roundabout," or long and complex, processes."
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Original Language: English
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Alan O. Ebenstein, Friedrich Hayek: A Biography (2001), Ch. 6 : LSE
https://en.wikiquote.org/wiki/Prices_and_Production
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Prices and Production
Prices and Production is a 1931 book written by Friedrich Hayek. In 1935, It was revised.
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