The Transformation of Goods of Higher Order into Goods of Lower Order Takes Place in Time

Menger talks of higher-order goods [production goods or produced instruments of production] being sequentially “transformed” until their emergence as consumption goods [first-order goods, lowest order goods]. At an early stage in the development of civilization people learn that they can do more than simply “gather the goods of lowest order that happen to be offered by nature” and can deliberately and carefully fashion more productive means of production, production goods. Doing so, however, takes time.

The transformation of goods of higher order into goods of lower order takes place, as does every other process of change, in time. The times at which men will obtain command of goods of first order from the goods of higher order in their present possession will be more distant the higher the order of these goods.

Production goods thus exist at any moment in time in a structure of production. The structure of production reflects the fact that production takes time. Some production services must be used sooner than others, and some production services must be used together as complementary inputs. Because production takes time, and because time is valuable, the “longer” the process of production the more productive of utility it must be in order to be economically justifiable. And the longer one takes in production, the more opportunity is available to perfect the quality and/or increase the quantity of what is being produced.

—Peter Lewin and Nicolas Cachanosky, Austrian Capital Theory: A Modern Survey of the Essentials, Cambridge Elements in Austrian Economics (Cambridge, UK: Cambridge University Press, 2019), 5-6.