Senior's understanding that investment increases output per worker was an important insight, but a somewhat vagrant insight. One might say, very well, investment increases productivity, but why? Why should investment, in and of itself, increase output per worker?
The Austrian economists, such as Eugen von Bohm-Bawerk, had an answer to that. They claimed that "roundabout" production is more productive than direct or simple production. A favorite example of "roundabout" production was taken from the Robinson Crusoe story: rather than trying to catch fish with his bare hands, Robinson first made a fish-net, and then used the net to catch fish, much more productively. Another example (and much more important in practice) is mechanized production, in which resources are first set aside to build machines, and then the machines are used to produce goods and services. In a still more roundabout example, society might first set aside resources for research, design and development to create a more effective technology, then build machines using that technology, then use the machines to produce goods and services.
The "roundaboutness" theory was widely adopted after the "Austrian" school introduced it. It was sometimes criticized as "Robinson Crusoe economics," the point of the criticism being that Robinson's isolation from society was fiction, and that in the real world, "roundabout" production is caught up in the division of labor and widespread trade in modern society (and also in the divisions and conflict of classes in modern society) and yet it abstracted from all that. However, the Robinson Crusoe example made the point that roundabout production, in and of itself, can increase productivity.
So: roundabout production proceeds by stages, and produces goods for consumption only at the last stage. And since society has to set resources aside for the earlier stages, investment is necessary in order to allow increased roundaboutness. This gives an answer to "why should investment, in itself, increase productivity? The Austrian economists also adopted the "time preference" theory to explain why the supply of investment funds would be limited.
Inspired by ideas like those of Senior and Bohm-Bawerk, many twentieth-century economists came to see investment as the key to economic growth.
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