''Capital and Interest'' () is a three-volume work on

finance Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...

published by Austrian economist

Eugen Böhm von Bawerk Eugen is a masculine given name which may refer to: * Archduke Eugen of Austria (1863–1954), last Habsburg Grandmaster of the Teutonic Order from 1894 to 1923 * Prince Eugen, Duke of Närke (1865–1947), Swedish painter, art collector, and pa ...

(1851–1914). The first two volumes were published in the 1880s when he was teaching at the

University of Innsbruck The University of Innsbruck (; ) is a public research university in Innsbruck, the capital of the Austrian federal state of Tyrol (state), Tyrol, founded on October 15, 1669. It is the largest education facility in the Austrian States of Austria, ...

. The first volume of Capital and Interest, titled ''History and Critique of Interest Theories'' (1884), is an exhaustive survey of the alternative treatments of the phenomenon of

interest In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...

: use theories, productivity theories, abstinence theories, and many more. In this work Böhm-Bawerk built upon the

time preference In behavioral economics, time preference (or time discounting,. delay discounting, temporal discounting, long-term orientation) is the current relative valuation placed on receiving a good at an earlier date compared with receiving it at a late ...

ideas of

Carl Menger Carl Menger von Wolfensgrün (; ; 28 February 1840 – 26 February 1921) was an Austrian economist who contributed to the marginal theory of value. Menger is considered the founder of the Austrian school of economics. In building his margi ...

, insisting that there is always a difference in value between present

goods In economics, goods are anything that is good, usually in the sense that it provides welfare or utility to someone. Alan V. Deardorff, 2006. ''Terms Of Trade: Glossary of International Economics'', World Scientific. Online version: Deardorffs ...

and future goods of equal quality, quantity, and form. Furthermore, the value of future goods diminishes as the length of time necessary for their completion increases. Böhm-Bawerk cited three reasons for this difference in value. First of all, in a growing

economy An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

, the supply of goods will always be larger in the future than it is in the present. Secondly, people have a tendency to underestimate their future needs due to carelessness and shortsightedness. Finally,

entrepreneur Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk (assumed by a traditional business), and potentially involving values besides simply economic ones. An entreprene ...

s would rather initiate production with goods presently available, instead of waiting for future goods and delaying production. Also included was a critique of

Marx Karl Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet '' The Communist Manifesto'' (written with Friedrich Engels) ...

's exploitation theory. Böhm-Bawerk argued that capitalists do not exploit workers; they accommodate workers – by providing them with income well in advance of the revenue from the output they helped to produce. Böhm-Bawerk's ''Positive Theory of Capital'' (1889), offered as the second volume of Capital and Interest, elaborated on the economy's time-consuming production processes and of the interest payments they entail. Book III, Value and Price, built on Menger's Principles to present a distinctly Austrian version of

marginalism Marginalism is a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. It states that the reason why the price of diamonds is higher than that of wa ...

. To illustrate marginalism, he gave the following example: ''Further Essays on Capital and Interest'' (1921) was started as appendices to the second volume, but appeared as a third volume. All three volumes were recently published together as a bound set by Libertarian Press. Libertarian Press's edition was translated by

Hans Sennholz Hans F. Sennholz (; ; 3 February 1922 – 23 June 2007) was a German-born American Austrian School economist and prolific author who studied under Ludwig von Mises. A Luftwaffe pilot during World War II, he was shot down over North Africa on 31 Au ...

and first published in 1959. The

Ludwig von Mises Institute The Ludwig von Mises Institute for Austrian Economics, or Mises Institute, is a nonprofit think tank headquartered in Auburn, Alabama, that is a center for Austrian economics, right-wing libertarian thought and the paleolibertarian and anarcho ...

made available in 2007 the William Smart translations as ''Capital and Interest'', ''Positive Theory of Capital'', and ''Recent Literature on Interest''.

References

External links

{{cite book, last=Böhm-Bawerk, first=Eugen von, title=Capital and Interest, year=1891, orig-year=1889, chapter=The Positive Theory of Capital, volume=2, translator=William Smart, publisher=Ludwig von Mises Institute, url=https://cdn.mises.org/The%20Positive%20Theory%20of%20Capital.pdf 1884 non-fiction books 1889 non-fiction books 1921 non-fiction books 1959 non-fiction books Austrian School publications Books about investing Interest 1921 in economic history