In the evenly rotating economy (ERE) which follows a progressing phase, only the intermediary factor owners see unambiguous real gains without transitional distortion. The higher stages gain via temporary profit (which disappears), and the lower stages face nominal losses that may or may not be offset by falling prices. Thus, the cleanest expression of progress in Rothbard’s analysis—as separated from profit and loss—is found in the middle stages of production. In Rothbard’s capital theory, the clearest beneficiaries of economic progress are factor owners in the intermediary stages of production, who experience no nominal disruption but gain in real terms due to increased purchasing power. These gains are structurally distinct from entrepreneurial profit and unaffected by transitional losses at other stages.
Put differently, in the evenly rotating economy (ERE) which follows a progressing phase, after the effect of saving plays out, higher stage production processes will benefit both nominally and in real terms, while lower stages’ profit in real terms are offset by nominal loss (due to the reduction in consumption). However, there must be an intermediary production processes who benefit solely in real terms.
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