In the article, a diagram is used to describe the structure of production. It is in conical form. I understand its dimensions except for the following: Looking at the surface area of a cross section, what is the auther saying this actually represents?
The author states: “What we can also think of the cross sectional area of the cone as measuring, therefore, is the flux of money flowing through the system–or of corporate (and, strictly, non-corporate business) revenue at each particular stage of production.”
He’s just saying that each vertical cross-section of the cone represents one stage in the production process, with the stages farther from the final consumer to the left and those closer to the consumer to the right. The boxes under the cone indicate the progression of the production process.
Yes, but what do we make of the “surface area” that he describes? He is clearly showing this as a three dimensional representation. I understand the stages of production, higher orders, etc. And, I understand the exponential shape that relates to discounted future values. It is the “surface area” of the cross section that I do not understand. In two dimensions, it’s not all that much different from a Hayekian triangle. But, he didn’t draw this in two dimensions. It’s a three dimensional form, its this third dimension that I simply cannot get a handle on.