The Dao of Capital: Austrian Investing in a Distorted World

Chapter Five

Umweg

The Roundabout Path of the Unternehmer

The gospel of this book, which should be obvious by now, is the strategic positional advantage gained in the roundabout way, in the relation of indirect means and conditions to ultimate ends and consequences—that is, in intentionally (and counterintuitively) going right in order to better go left, rather than taking the direct route (the “false shortcut”1). We have approached the roundabout by way of synonymous concepts across the historical foundation of strategic thought, from the Daoists’ shi to the Prussians’ Ziel, Mittel, und Zweck, culminating now with a core tenet of the great Austrian economic tradition: Umweg.

Umweg, like shi, is a lowly and mundane term, which disguises its philosophical and practical significance. It translates literally as “detour,” “indirect,” or “roundabout route,” and its economic meaning springs from a pillar of the Austrian School, a man who was truly a cofounder with Carl Menger: Eugen von Böhm-Bawerk. Building upon Menger’s theories, Böhm-Bawerk clarified and popularized them, and then cumulatively postulated more of his own—crucial to the study of value, capital, and interest. Indeed, had it been left to Menger, sequestered in his library and consumed with constant revisions of his previous works, the Austrian tradition would have surely died on the vine. It was under Böhm-Bawerk, who was no mere disciple, that the Austrian approach acquired the rigor to be considered a school of economic ...