Frank Albert Fetter: Review of Böhm-Bawerk, Positive Theorie des Capitals

Frank Albert Fetter’s brief book review, originally published in 1902 and reprinted in 1977, assesses the second edition of Böhm-Bawerk’s Positive Theorie des Capitals. Its central judgment is that the work’s extraordinary stimulus to economic theory has not secured the continuing acceptance of its theory of interest. Fetter moves from disappointed expectations about the edition to a distinction between defending a theory and revising it.

This second edition, long awaited with lively expectation by students of economic theory, proves to be an unchanged reprint of the first edition published some fourteen years ago.

The absence of revision initially receives a practical explanation: Böhm-Bawerk’s recently undertaken duties as Austrian finance minister have prevented him from revising this part of Capital und Capitalzins. He still intends to revise it when circumstances permit. Fetter nevertheless finds a deeper obstacle in the author’s replies to critics. These indicate no appreciable change in his position; intellectual controversy has produced renewed exposition rather than amendment.

His writings on the problem in the past fifteen years have been taken up, not with the revision and amendment of his interest theory, but merely with a restatement and defense of his well-known views against the critics who have assailed it from many directions.

Fetter’s decisive conceptual move is to separate influence from validity. He calls Böhm-Bawerk’s work the most stimulating influence on economic theory in half a century, yet predicts that the Positive Theory will share the fate of earlier theories and become increasingly difficult for students to accept. Each passing year therefore makes revision harder, not merely more overdue. The review’s relevance lies in this sharply qualified appraisal: a major theoretical contribution can retain its historical importance while losing assent. Fetter does not specify the critics’ objections or demonstrate the theory’s defects here; his compact verdict concerns its reception and the limits of defensive restatement.