Dated Labour Inputs and the Period of Production

Abstract

The Austrian school, in particular Carl Menger, thought of the production process as being a linear process which went through a finite number of stages. In the first (or highest) stage only nonproducible inputs produce “goods of the highest order”. In the next stage nonproducible inputs together with goods of the highest order produce goods of the second highest order and so on until in the last stage nonproducible inputs and goods of the second lowest order produce goods of the lowest order which are consumption goods. It is clear that the matrix of input output coefficients has to have a certain structure in order to confirm with Menger’s model of production. If you order the indices of the different goods according to the order number of the goods then the matrix A would look like this.