On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises (Mary Sennholz)
- Highlight Loc. 4675-80 | Added on Sunday, October 02, 2011, 06:24 AM
The effect of consumer demand upon capital is not demand for capital per se. Capital is always in demand as long as time-preference exists—as long as capital yields the reward of interest. Rather, the effect of “derived demand” will be, if strong enough, merely to change the form of capital goods, no more. If not otherwise impeded, capital will always flow to the most urgent of the least satisfied demands. The point is that capital accumulation—saving and investment—must come before “derived demand.” So-called derived demand merely shifts already existing productive resources from present applications to alternative but more rewarding applications.
- Highlight Loc. 4675-80 | Added on Sunday, October 02, 2011, 06:24 AM
The effect of consumer demand upon capital is not demand for capital per se. Capital is always in demand as long as time-preference exists—as long as capital yields the reward of interest. Rather, the effect of “derived demand” will be, if strong enough, merely to change the form of capital goods, no more. If not otherwise impeded, capital will always flow to the most urgent of the least satisfied demands. The point is that capital accumulation—saving and investment—must come before “derived demand.” So-called derived demand merely shifts already existing productive resources from present applications to alternative but more rewarding applications.
