[Introduction and Editorial Context of the Handelsblatt Library]: This introductory section outlines the scope and purpose of the 'Klassiker der Nationalökonomie' collection, emphasizing the preservation of significant economic texts from the mercantilist to the neoclassical eras. It highlights the series' focus on the history of economic theory and the importance of re-evaluating classical works within their historical and analytical contexts. [Table of Contents and Publication Metadata]: A listing of the contributors and their respective essays within this commentary volume, alongside the publication details for the facsimile edition of Böhm-Bawerk's 1884 work on capital and interest. [Discoveries and Errors in the History of Interest Theories: Part I]: Bertram Schefold provides a comprehensive overview of the history of economic thought (Dogmengeschichte), evaluating key historical surveys by authors such as Roscher, Dühring, Cannan, and Marx. He contrasts their various systematic approaches—ranging from philosophical connections and political orientations to formal analytical structures—culminating in Schumpeter's enzyclopedic history. The segment establishes the context for Böhm-Bawerk's specific contribution as a work of rigorous theoretical history focused exclusively on the explanation of interest. [Böhm-Bawerk's Analytical Framework and Critique of Predecessors]: Schefold analyzes Böhm-Bawerk's unique methodology, which isolates the question of interest from broader historical or biographical contexts. He discusses the transition from older conceptions of interest to the modern interpretation of intertemporal exchange. The essay critiques various historical theories—Productivity, Fructification (Turgot), and Use (Walras/Menger)—detailing Böhm-Bawerk's arguments against them, such as the failure to distinguish between capital goods and their 'use' or the circularity in valuing capital based on interest rates. [Classical vs. Neoclassical Perspectives on Interest and Profit]: This section contrasts the classical approach to distribution (Smith, Ricardo, Marx) with the neoclassical/Austrian view. Schefold uses modern formalizations (Sraffa) to explain how classical economists derived the profit rate from a physical surplus, whereas Böhm-Bawerk viewed interest as an intertemporal price. It explores the distinction between the rate of profit and the rate of interest, noting that while classical authors saw them as distinct but related phenomena, Böhm-Bawerk's 'roundaboutness' (Produktionsumweg) attempted to unify them through the average production period. [The Legacy and International Context of Böhm-Bawerk's Work]: Schefold concludes his essay by linking Böhm-Bawerk's concepts, such as the production period, to Sraffa's maximum profit rate. He emphasizes the influence of German economic thought on the Austrian school and highlights how Böhm-Bawerk's critical history served as a necessary precursor to his 'Positive Theory.' The work is presented as a bridge between classical traditions and modern international theory development. [Epigrams on Eugen von Böhm-Bawerk: Personality and Work]: A collection of quotes and reflections from prominent economists regarding Böhm-Bawerk's life as a civil servant and scholar. Schumpeter, Menger, and others describe his character, his role as Finance Minister, his rigorous analytical style, and his position as the 'St. Paul' of the Austrian School. The epigrams highlight the tension between his political duties and his scientific contributions. [Critical Perspectives on Method and Theory]: This segment compiles diverse critical views on Böhm-Bawerk's methodology and specific theories. It includes Bortkiewicz's critique of the production period, Schumpeter's analysis of his analytical power, and Hilferding's Marxist response to Böhm-Bawerk's critique of value theory. The quotes illustrate the wide-ranging impact of his work on both supporters and ideological opponents. [Excerpts from the Works of Böhm-Bawerk]: A selection of key passages from Böhm-Bawerk's own writings, covering his definitions of subjective and objective value, the relationship between costs and marginal utility, the concept of 'roundabout' production, and his famous critique of the Marxian system. These excerpts provide a direct look at his core theoretical arguments regarding capital, interest, and value. [In Search of the 'Redeeming Word': Heinz D. Kurz on Böhm-Bawerk]: The beginning of an essay by Heinz D. Kurz exploring Böhm-Bawerk's quest for a definitive explanation of interest. The segment introduces the theme of rigorous proof versus mere intuition in scientific discovery. [Über Autor und Werk: Böhm-Bawerks akademischer und politischer Werdegang]: This section provides a biographical and bibliographical overview of Eugen von Böhm-Bawerk, focusing on his academic tenure in Innsbruck and his political career as the Austrian Minister of Finance. It details the publication history of his major work, 'Kapital und Kapitalzins', including the significant additions made to the second and third editions of the first volume, such as critiques of John Rae and the third volume of Marx's Capital. [Das Kapitalzinsproblem und der Gang der Untersuchung]: Böhm-Bawerk defines capital as a complex of produced means of acquisition and identifies the central problem of interest as its 'labor-free' emergence from capital. He outlines his critical methodology, which seeks to trace economic phenomena back to psychological and natural facts, and explains his systematic grouping of previous interest theories into categories like productivity, abstinence, and exploitation theories. [Die frühe Literatur: Von der Antike bis zu den Vorläufern Turgot und Smith]: The text examines early opposition to interest in Antiquity and Scholasticism, noting the eventual shift toward justification as commerce flourished. Böhm-Bawerk highlights Turgot as the first to seek a scientific explanation for interest via 'fructification theory' and discusses how early thinkers like Salmasius, Petty, and Galiani anticipated his own 'Agio theory' regarding time-valuation. [David Ricardo und die klassische Profittheorie]: This section analyzes David Ricardo's theory of profit, which Böhm-Bawerk classifies as 'colorless' regarding the origin of interest but 'brilliant' regarding its magnitude. The text explores the 'iron connection' between wages and profits in Ricardo's system and Böhm-Bawerk's critique that Ricardo failed to identify independent determinants for the rate of profit, relying instead on a residual calculation based on the subsistence wage. [Die Produktivitätstheorien: Naive und motivierte Ansätze]: Böhm-Bawerk critiques 'Productivity Theories' of interest, distinguishing between 'naive' versions (Say, Roscher) that conflate physical productivity with value creation, and 'motivated' versions (Thünen, Lauderdale) that attempt to explain why surplus product results in surplus value. He argues that while capital increases physical output through 'roundabout' production, these theories fail to explain why competition doesn't eliminate the resulting value surplus. [Die Nutzungstheorien: Hermann und Menger]: This section examines the 'Use Theories' (Nutzungstheorien) of interest, which posit that capital provides a distinct service or 'use' beyond its substance. It traces the development from Say to Hermann and finally to Carl Menger, who integrated it into a more sophisticated value theory. The text discusses Menger's view of interest as a value problem arising from the temporary disposal of higher-order goods, while noting the emerging 'imputation problem' (Zurechnungsproblem) that challenged the Austrian School. [Böhm-Bawerks Kritik der Nutzungstheorien]: Böhm-Bawerk presents a rigorous critique of Use Theories, labeling the separation of capital and its 'use' as an impermissible fiction. He aligns with the Canonists' historical view that ownership includes all uses, arguing that the value of a good is simply the sum of its services. He introduces his own view of the loan as an exchange of present for future goods, where interest is an 'agio' or premium based on the time difference of availability. [Die Abstinenztheorie und Arbeitstheorien]: This segment analyzes the Abstinence Theory of Nassau William Senior and various Labor Theories of interest. Böhm-Bawerk defends Senior against socialist critiques but identifies a logical flaw in double-counting labor and abstinence as separate sacrifices. He argues that the 'sacrifice' is either labor-pain or lost enjoyment, never both. Labor theories are dismissed as unconvincing attempts to justify interest as a wage for the capitalist's 'effort'. [Die Ausbeutungstheorie: Marx-Kritik]: A detailed critique of the Socialist 'Exploitation Theory', focusing primarily on Karl Marx. Böhm-Bawerk attacks the Labor Theory of Value as a 'dialectical hocus-pocus' and highlights the 'irreconcilable contradiction' between Volume I and Volume III of Marx's Capital regarding the equalization of profit rates. The text also discusses the 'transformation problem' and the insights of Ladislaus von Bortkiewicz regarding the simultaneous determination of prices and profit. [Das Recht auf den vollen Arbeitsertrag und Zeitdifferenz]: Böhm-Bawerk addresses the socialist claim to the 'full product of labor'. He argues that the time difference between labor input and product completion justifies interest, as workers receive wages before the product exists. He posits that the higher valuation of present goods over future goods (myopia) is a natural human trait, not a social construct, and is the ultimate cause of capital interest. [Vorläufer der Positiven Theorie: Rae, Bentham und Jevons]: Böhm-Bawerk evaluates his predecessors, specifically John Rae, Jeremy Bentham, and Stanley Jevons. He acknowledges Rae's anticipation of psychological time preference ('effective desire of accumulation') and technical productivity but criticizes Rae for failing to integrate these into a unified value theory. The section highlights Böhm-Bawerk's defense of his own originality while critiquing Rae's understanding of the relationship between technical progress and interest rates. [Formale Analyse der technischen Änderung und Profitrate]: The text concludes with a formal mathematical analysis of how technical changes affect the profit rate. It critiques Böhm-Bawerk's misunderstanding of Rae's value measures and reproduction costs. Using a system of simultaneous price equations, it demonstrates that 'advantageous' technical changes only increase the profit rate if they affect the production of wage goods, confirming Ricardo's earlier insights which Rae followed and Böhm-Bawerk misinterpreted. [Schlussbemerkung zur Geschichte und Kritik der Kapitalzins-Theorien]: This concluding remark offers a balanced critique of Böhm-Bawerk's seminal work. It praises the book's immense erudition and its role in preserving the history of economic thought, while simultaneously criticizing its pedantry, unfair judgments of predecessors like Ricardo and Rae, and Böhm-Bawerk's own analytical limitations regarding general equilibrium and simultaneous determination of economic variables. [Literaturhinweise]: A comprehensive bibliography of primary and secondary literature related to capital and interest theory, featuring works by Böhm-Bawerk, Marx, Ricardo, Smith, and modern commentators like Kurz, Garegnani, and Schefold. [Mark Blaug: Eugen von Böhm-Bawerks »Geschichte und Kritik der Kapitalzins-Theorien«]: Mark Blaug provides a historical and critical overview of Böhm-Bawerk's work within the context of the Marginalist Revolution. He discusses the unique structure of the book as a polemical prelude to a new theory, analyzes Böhm-Bawerk's classification of interest theories (e.g., productivity, abstinence, exploitation), and critiques his 'three reasons' for interest. Blaug highlights the tension between Böhm-Bawerk's rejection of predecessors and the similarities in their ideas, particularly regarding Marshall and Fisher, and notes the eventual decline of the 'production period' concept in favor of general equilibrium models. [Mark Blaug: Literaturverzeichnis]: Short bibliography for Mark Blaug's essay. [Peter Bernholz: Die Bedeutung von Böhm-Bawerks Kapital- und Zinstheorie aus historischer Sicht]: Peter Bernholz introduces an analysis of Böhm-Bawerk's contribution to capital theory. He cites various historical assessments from Wicksell, Fisher, and Niehans, acknowledging both the lack of absolute originality in individual components and the revolutionary impact of integrating these ideas into a coherent, fruitful theory that influenced economic thought into the 20th century. [Die Gültigkeit der drei Gründe für einen positiven realen Zinssatz]: This section analyzes Böhm-Bawerk's three reasons for a positive real interest rate: expected future abundance, systematic undervaluation of future needs (time preference), and the higher productivity of roundabout production methods. Using Edgeworth diagrams and transformation curves, the authors demonstrate that while the first two reasons are sufficient for a positive interest rate in exchange economies, the third reason (productivity) requires growth or specific time preferences to explain interest in a stationary state. It also addresses critiques from Friedrich von Wieser and Irving Fisher regarding the necessity and sufficiency of these factors. [Schumpeters Kritik und die Rolle von Innovationen]: The authors examine Schumpeter's claim that the real interest rate in a stationary economy must be zero. By modeling technological shifts and the exhaustion of the most productive known technologies, they show that Schumpeter is partially correct if time preference is neutral. However, they argue that Böhm-Bawerk's framework is actually superior for modeling inventions and innovations, as new technologies create new production possibilities that sustain positive interest rates until a new stationary state is reached. [Verallgemeinerungen und die neoklassische Kapital- und Wachstumstheorie]: This section bridges Austrian capital theory with neoclassical growth models. It discusses the 'Golden Rule' of accumulation and proves that Böhm-Bawerk's concepts of roundaboutness and time preference are essential for explaining positive interest rates in efficient growth programs. It critiques the neoclassical 'nontightness' assumption, arguing that Böhm-Bawerk's approach is more intuitively plausible and covers more cases, including linear technologies and infinite time horizons. [Die zeitliche Struktur der kapitalistischen Produktion und ihre Weiterentwicklung]: The authors identify the temporal structure of production as Böhm-Bawerk's most significant contribution, despite his analytical failures regarding the 'average period of production'. The segment traces the evolution of these ideas through Wicksell, Fisher, Åkerman, and von Stackelberg, leading to modern formulations using activity analysis and non-linear programming. It concludes by discussing the potential of this framework for business cycle theory, specifically regarding the non-malleability of capital goods and investment shocks as explored by Hayek and Wenig. [Böhm-Bawerk's Evaluation of His Predecessors]: This section examines Böhm-Bawerk's critical assessment of earlier economists such as Turgot, Senior, and Rae. While critics like Edgeworth and Hennings argue that Böhm-Bawerk was overly dismissive of his predecessors, the author suggests his critiques served as a necessary foundation for his 'positive' theory. The text analyzes specific contributions from Turgot regarding the time-consuming nature of production, Senior's 'abstinence' as a cost factor, and Rae's early insights into the superiority of roundabout processes and the undervaluation of future goods, concluding that while these thinkers provided essential building blocks, they lacked the consistent value theory required to explain positive interest rates fully. [Conclusions on Böhm-Bawerk's Legacy]: The author summarizes Böhm-Bawerk's primary merit as the integration of disparate historical ideas into a comprehensive theory of capital and interest. Despite internal inconsistencies, his focus on the temporal structure of production and intertemporal exchange laid the groundwork for modern growth models, the study of exhaustible resources, and the theories of Fisher, Lindahl, and Hicks. The conclusion reaffirms his status as one of the most original thinkers in economic history. [Bibliography]: A comprehensive list of academic references cited in the text, covering major works in capital and interest theory from the 18th century to the late 20th century, including key Austrian, neoclassical, and modern mathematical economic texts. [Biography: Eugen von Böhm-Bawerk (1851–1914)]: A detailed chronological biography of Eugen von Böhm-Bawerk, tracing his life from his birth in Brünn to his death in 1914. It covers his education with Friedrich von Wieser, his academic career in Innsbruck and Vienna, his significant political service as the Austrian Minister of Finance (including his role in the gold standard reform), and his final return to academia where he taught students like Schumpeter and Mises. [List of Writings and Selected Literature]: A list of primary works by Böhm-Bawerk, including his major treatises and influential essays like 'Zum Abschluß des Marx'schen Systems'. This is followed by a curated list of secondary literature and interpretations by other economists such as Hayek, Kaldor, and Schumpeter. [Genealogy of Economic Thought: Timeline]: A chronological table (Zeittafel) mapping the births, deaths, and major publications of significant economists from 1723 (Adam Smith) to 1950 (Eucken and Schumpeter). It contextualizes Böhm-Bawerk's life and work within the broader history of economic science. [About the Interpreters]: Biographical sketches of the three scholars who provided the interpretations in this volume: Mark Blaug, a renowned historian of economic thought; Peter Bernholz, an expert in capital theory and public choice; and Heinz D. Kurz, a specialist in production theory and the history of economic analysis.
This introductory section outlines the scope and purpose of the 'Klassiker der Nationalökonomie' collection, emphasizing the preservation of significant economic texts from the mercantilist to the neoclassical eras. It highlights the series' focus on the history of economic theory and the importance of re-evaluating classical works within their historical and analytical contexts.
Read full textA listing of the contributors and their respective essays within this commentary volume, alongside the publication details for the facsimile edition of Böhm-Bawerk's 1884 work on capital and interest.
Read full textBertram Schefold provides a comprehensive overview of the history of economic thought (Dogmengeschichte), evaluating key historical surveys by authors such as Roscher, Dühring, Cannan, and Marx. He contrasts their various systematic approaches—ranging from philosophical connections and political orientations to formal analytical structures—culminating in Schumpeter's enzyclopedic history. The segment establishes the context for Böhm-Bawerk's specific contribution as a work of rigorous theoretical history focused exclusively on the explanation of interest.
Read full textSchefold analyzes Böhm-Bawerk's unique methodology, which isolates the question of interest from broader historical or biographical contexts. He discusses the transition from older conceptions of interest to the modern interpretation of intertemporal exchange. The essay critiques various historical theories—Productivity, Fructification (Turgot), and Use (Walras/Menger)—detailing Böhm-Bawerk's arguments against them, such as the failure to distinguish between capital goods and their 'use' or the circularity in valuing capital based on interest rates.
Read full textThis section contrasts the classical approach to distribution (Smith, Ricardo, Marx) with the neoclassical/Austrian view. Schefold uses modern formalizations (Sraffa) to explain how classical economists derived the profit rate from a physical surplus, whereas Böhm-Bawerk viewed interest as an intertemporal price. It explores the distinction between the rate of profit and the rate of interest, noting that while classical authors saw them as distinct but related phenomena, Böhm-Bawerk's 'roundaboutness' (Produktionsumweg) attempted to unify them through the average production period.
Read full textSchefold concludes his essay by linking Böhm-Bawerk's concepts, such as the production period, to Sraffa's maximum profit rate. He emphasizes the influence of German economic thought on the Austrian school and highlights how Böhm-Bawerk's critical history served as a necessary precursor to his 'Positive Theory.' The work is presented as a bridge between classical traditions and modern international theory development.
Read full textA collection of quotes and reflections from prominent economists regarding Böhm-Bawerk's life as a civil servant and scholar. Schumpeter, Menger, and others describe his character, his role as Finance Minister, his rigorous analytical style, and his position as the 'St. Paul' of the Austrian School. The epigrams highlight the tension between his political duties and his scientific contributions.
Read full textThis segment compiles diverse critical views on Böhm-Bawerk's methodology and specific theories. It includes Bortkiewicz's critique of the production period, Schumpeter's analysis of his analytical power, and Hilferding's Marxist response to Böhm-Bawerk's critique of value theory. The quotes illustrate the wide-ranging impact of his work on both supporters and ideological opponents.
Read full textA selection of key passages from Böhm-Bawerk's own writings, covering his definitions of subjective and objective value, the relationship between costs and marginal utility, the concept of 'roundabout' production, and his famous critique of the Marxian system. These excerpts provide a direct look at his core theoretical arguments regarding capital, interest, and value.
Read full textThe beginning of an essay by Heinz D. Kurz exploring Böhm-Bawerk's quest for a definitive explanation of interest. The segment introduces the theme of rigorous proof versus mere intuition in scientific discovery.
Read full textThis section provides a biographical and bibliographical overview of Eugen von Böhm-Bawerk, focusing on his academic tenure in Innsbruck and his political career as the Austrian Minister of Finance. It details the publication history of his major work, 'Kapital und Kapitalzins', including the significant additions made to the second and third editions of the first volume, such as critiques of John Rae and the third volume of Marx's Capital.
Read full textBöhm-Bawerk defines capital as a complex of produced means of acquisition and identifies the central problem of interest as its 'labor-free' emergence from capital. He outlines his critical methodology, which seeks to trace economic phenomena back to psychological and natural facts, and explains his systematic grouping of previous interest theories into categories like productivity, abstinence, and exploitation theories.
Read full textThe text examines early opposition to interest in Antiquity and Scholasticism, noting the eventual shift toward justification as commerce flourished. Böhm-Bawerk highlights Turgot as the first to seek a scientific explanation for interest via 'fructification theory' and discusses how early thinkers like Salmasius, Petty, and Galiani anticipated his own 'Agio theory' regarding time-valuation.
Read full textThis section analyzes David Ricardo's theory of profit, which Böhm-Bawerk classifies as 'colorless' regarding the origin of interest but 'brilliant' regarding its magnitude. The text explores the 'iron connection' between wages and profits in Ricardo's system and Böhm-Bawerk's critique that Ricardo failed to identify independent determinants for the rate of profit, relying instead on a residual calculation based on the subsistence wage.
Read full textBöhm-Bawerk critiques 'Productivity Theories' of interest, distinguishing between 'naive' versions (Say, Roscher) that conflate physical productivity with value creation, and 'motivated' versions (Thünen, Lauderdale) that attempt to explain why surplus product results in surplus value. He argues that while capital increases physical output through 'roundabout' production, these theories fail to explain why competition doesn't eliminate the resulting value surplus.
Read full textThis section examines the 'Use Theories' (Nutzungstheorien) of interest, which posit that capital provides a distinct service or 'use' beyond its substance. It traces the development from Say to Hermann and finally to Carl Menger, who integrated it into a more sophisticated value theory. The text discusses Menger's view of interest as a value problem arising from the temporary disposal of higher-order goods, while noting the emerging 'imputation problem' (Zurechnungsproblem) that challenged the Austrian School.
Read full textBöhm-Bawerk presents a rigorous critique of Use Theories, labeling the separation of capital and its 'use' as an impermissible fiction. He aligns with the Canonists' historical view that ownership includes all uses, arguing that the value of a good is simply the sum of its services. He introduces his own view of the loan as an exchange of present for future goods, where interest is an 'agio' or premium based on the time difference of availability.
Read full textThis segment analyzes the Abstinence Theory of Nassau William Senior and various Labor Theories of interest. Böhm-Bawerk defends Senior against socialist critiques but identifies a logical flaw in double-counting labor and abstinence as separate sacrifices. He argues that the 'sacrifice' is either labor-pain or lost enjoyment, never both. Labor theories are dismissed as unconvincing attempts to justify interest as a wage for the capitalist's 'effort'.
Read full textA detailed critique of the Socialist 'Exploitation Theory', focusing primarily on Karl Marx. Böhm-Bawerk attacks the Labor Theory of Value as a 'dialectical hocus-pocus' and highlights the 'irreconcilable contradiction' between Volume I and Volume III of Marx's Capital regarding the equalization of profit rates. The text also discusses the 'transformation problem' and the insights of Ladislaus von Bortkiewicz regarding the simultaneous determination of prices and profit.
Read full textBöhm-Bawerk addresses the socialist claim to the 'full product of labor'. He argues that the time difference between labor input and product completion justifies interest, as workers receive wages before the product exists. He posits that the higher valuation of present goods over future goods (myopia) is a natural human trait, not a social construct, and is the ultimate cause of capital interest.
Read full textBöhm-Bawerk evaluates his predecessors, specifically John Rae, Jeremy Bentham, and Stanley Jevons. He acknowledges Rae's anticipation of psychological time preference ('effective desire of accumulation') and technical productivity but criticizes Rae for failing to integrate these into a unified value theory. The section highlights Böhm-Bawerk's defense of his own originality while critiquing Rae's understanding of the relationship between technical progress and interest rates.
Read full textThe text concludes with a formal mathematical analysis of how technical changes affect the profit rate. It critiques Böhm-Bawerk's misunderstanding of Rae's value measures and reproduction costs. Using a system of simultaneous price equations, it demonstrates that 'advantageous' technical changes only increase the profit rate if they affect the production of wage goods, confirming Ricardo's earlier insights which Rae followed and Böhm-Bawerk misinterpreted.
Read full textThis concluding remark offers a balanced critique of Böhm-Bawerk's seminal work. It praises the book's immense erudition and its role in preserving the history of economic thought, while simultaneously criticizing its pedantry, unfair judgments of predecessors like Ricardo and Rae, and Böhm-Bawerk's own analytical limitations regarding general equilibrium and simultaneous determination of economic variables.
Read full textA comprehensive bibliography of primary and secondary literature related to capital and interest theory, featuring works by Böhm-Bawerk, Marx, Ricardo, Smith, and modern commentators like Kurz, Garegnani, and Schefold.
Read full textMark Blaug provides a historical and critical overview of Böhm-Bawerk's work within the context of the Marginalist Revolution. He discusses the unique structure of the book as a polemical prelude to a new theory, analyzes Böhm-Bawerk's classification of interest theories (e.g., productivity, abstinence, exploitation), and critiques his 'three reasons' for interest. Blaug highlights the tension between Böhm-Bawerk's rejection of predecessors and the similarities in their ideas, particularly regarding Marshall and Fisher, and notes the eventual decline of the 'production period' concept in favor of general equilibrium models.
Read full textShort bibliography for Mark Blaug's essay.
Read full textPeter Bernholz introduces an analysis of Böhm-Bawerk's contribution to capital theory. He cites various historical assessments from Wicksell, Fisher, and Niehans, acknowledging both the lack of absolute originality in individual components and the revolutionary impact of integrating these ideas into a coherent, fruitful theory that influenced economic thought into the 20th century.
Read full textThis section analyzes Böhm-Bawerk's three reasons for a positive real interest rate: expected future abundance, systematic undervaluation of future needs (time preference), and the higher productivity of roundabout production methods. Using Edgeworth diagrams and transformation curves, the authors demonstrate that while the first two reasons are sufficient for a positive interest rate in exchange economies, the third reason (productivity) requires growth or specific time preferences to explain interest in a stationary state. It also addresses critiques from Friedrich von Wieser and Irving Fisher regarding the necessity and sufficiency of these factors.
Read full textThe authors examine Schumpeter's claim that the real interest rate in a stationary economy must be zero. By modeling technological shifts and the exhaustion of the most productive known technologies, they show that Schumpeter is partially correct if time preference is neutral. However, they argue that Böhm-Bawerk's framework is actually superior for modeling inventions and innovations, as new technologies create new production possibilities that sustain positive interest rates until a new stationary state is reached.
Read full textThis section bridges Austrian capital theory with neoclassical growth models. It discusses the 'Golden Rule' of accumulation and proves that Böhm-Bawerk's concepts of roundaboutness and time preference are essential for explaining positive interest rates in efficient growth programs. It critiques the neoclassical 'nontightness' assumption, arguing that Böhm-Bawerk's approach is more intuitively plausible and covers more cases, including linear technologies and infinite time horizons.
Read full textThe authors identify the temporal structure of production as Böhm-Bawerk's most significant contribution, despite his analytical failures regarding the 'average period of production'. The segment traces the evolution of these ideas through Wicksell, Fisher, Åkerman, and von Stackelberg, leading to modern formulations using activity analysis and non-linear programming. It concludes by discussing the potential of this framework for business cycle theory, specifically regarding the non-malleability of capital goods and investment shocks as explored by Hayek and Wenig.
Read full textThis section examines Böhm-Bawerk's critical assessment of earlier economists such as Turgot, Senior, and Rae. While critics like Edgeworth and Hennings argue that Böhm-Bawerk was overly dismissive of his predecessors, the author suggests his critiques served as a necessary foundation for his 'positive' theory. The text analyzes specific contributions from Turgot regarding the time-consuming nature of production, Senior's 'abstinence' as a cost factor, and Rae's early insights into the superiority of roundabout processes and the undervaluation of future goods, concluding that while these thinkers provided essential building blocks, they lacked the consistent value theory required to explain positive interest rates fully.
Read full textThe author summarizes Böhm-Bawerk's primary merit as the integration of disparate historical ideas into a comprehensive theory of capital and interest. Despite internal inconsistencies, his focus on the temporal structure of production and intertemporal exchange laid the groundwork for modern growth models, the study of exhaustible resources, and the theories of Fisher, Lindahl, and Hicks. The conclusion reaffirms his status as one of the most original thinkers in economic history.
Read full textA comprehensive list of academic references cited in the text, covering major works in capital and interest theory from the 18th century to the late 20th century, including key Austrian, neoclassical, and modern mathematical economic texts.
Read full textA detailed chronological biography of Eugen von Böhm-Bawerk, tracing his life from his birth in Brünn to his death in 1914. It covers his education with Friedrich von Wieser, his academic career in Innsbruck and Vienna, his significant political service as the Austrian Minister of Finance (including his role in the gold standard reform), and his final return to academia where he taught students like Schumpeter and Mises.
Read full textA list of primary works by Böhm-Bawerk, including his major treatises and influential essays like 'Zum Abschluß des Marx'schen Systems'. This is followed by a curated list of secondary literature and interpretations by other economists such as Hayek, Kaldor, and Schumpeter.
Read full textA chronological table (Zeittafel) mapping the births, deaths, and major publications of significant economists from 1723 (Adam Smith) to 1950 (Eucken and Schumpeter). It contextualizes Böhm-Bawerk's life and work within the broader history of economic science.
Read full textBiographical sketches of the three scholars who provided the interpretations in this volume: Mark Blaug, a renowned historian of economic thought; Peter Bernholz, an expert in capital theory and public choice; and Heinz D. Kurz, a specialist in production theory and the history of economic analysis.
Read full text