In this book production is conceived of as a circular process: commodities are produced by means of commodities. The present chapter is devoted to an investigation of three alternative ways to describe the technical conditions of production and a discussion of the relationships which exist between them and the description provided in the previous chapters. First, there is the view that production can be seen as a one-way avenue leading from the services of the “original” factors of production, labor and land, to the final product. Since in the following discussion we shall set aside the problem of land services, the product will be considered as obtained by a stream of labor inputs only. This approach to the theory of production is known as the “Austrian” approach, since it has been advocated by the founders of the Austrian tradition in economic thought, Menger, von Wieser, and von Böhm–Bawerk, and authors working in that tradition, most notably Wicksell and, more recently, Hicks. Second, there is the description of the conditions of production in terms of the concept of “vertical integration.” The latter consists of a generalization of the concept of the “sub-system” introduced in Chapter 3 for the two-commodity case. According to the third alternative the price vectors generated by a technique at a number of different levels of the rate of profit can be used to describe that technique.

Throughout this chapter we will be concerned with a single “technique” as defined in the previous chapter and not with the whole set of existing processes.