Capital and Interest (German: Kapital und Kapitalzins) is a three-volume work on finance published by Austrian economist Eugen Böhm von Bawerk. Translator’s Preface↩. My only reasons for writing a preface to a work so exhaustive, and in itself so lucid, as Professor Böhm-Bawerk’s Kapital und Kapitalzins. Capital and Interest (LvMI) – Kindle edition by Eugen von Böhm-Bawerk, William Smart. Download it once and read it on your Kindle device, PC, phones or.
It is very rarely indeed that, when a phenomenon first attracts attention, it is seen in its full extent, with all its constituent and peculiar details, and is then made the subject of one comprehensive inquiry.
The difficulties, however, which surround our special subject, the problem of interest, are so considerable that I do not feel it my duty to add lnterest them by taking up another.
This discussion forms the subject of an independent problem of no little difficulty—the problem of Undertaker’s Profit. When a manufacturer engages his capital in production he, as it were, throws it into solution, and risks it all on the chance of the consuming public paying a certain price for the products into which his capital is transformed.
In normal capitalist production, that is to say, not only is the value of capital consumed in the production process replaced, but a surplus of value appears. This at once enables us to estimate the Use theory of interest. I shall only treat that as interest which everybody recognises to be interest—that is to say, the whole of contract interest, 11 and, of the “natural” profit of undertaking only so much as represents the rate of interest usually obtainable for capital employed acpital undertaking.
The intentionally limited task to which I intend to devote myself in the following pages is that of writing a critical history of the theoretical problem of interest. The first efforts to accumulate capital must be attended by sacrifice; a temporary sacrifice, of course, to secure a permanent gain, iinterest, in the first instance at least, a material sacrifice.
But even he, in the earlier editions of his Handlungswisenschaft 67 never once touches on the controversy as to the theoretic legitimacy of interest. Where, as not seldom occurs notwithstanding this, exception is taken to profit obtained by personal exertions, the exception is not so much to the profit as such, as to some concrete and objectionable manner of getting it: Thus Grotius takes a hesitating middle course between the old and the new doctrine.
The first part of it has a great resemblance, perhaps accidental, to Calvin’s line of argument. This edition bawetk the first time it has been available in baderk than half a century.
A whole literature has been written on the subject of interest, and a literature which, bonm mere amount, is intereet by few of the departments of political economy, and by none in the variety of opinion it presents.
The most cogent argumentation on this point, though it may convince many who thought otherwise, will never convert all. When land is purchased for money, it is quite correct to think of the money as producing other sums of money in the shape of the yearly revenues from the land.
Its theologising innterest moralising do little more than simply express abhorrence of the taking of interest and appeal to authorities. And if our judgment on the theoretical interest problem is perverted, it will naturally react and prejudice our judgment on the practical and political question.
I need scarcely say that, in capial scanty remarks, I do not suppose myself to have given an exhaustive, or even a perfectly correct statement of the principles of the theory of capital. But to say that capital is “productive” does not explain interest, for capital would still be productive although it produced no interest; e.
In the one case interest is a payment for a tool; in the other, a recompense for a sacrifice. In the course of the seventeenth century the new doctrine made great strides, particularly in the Netherlands.
Thus the Productivity theory ends in suggesting that other and hostile theory according to which surplus value comes from labour, and is only snatched away by capital. Not one, nor two, nor three, but a round dozen of interest theories testify to the zeal with which economists have devoted themselves to the investigation of this remarkable problem. Views Read Edit View history.
Capital and Interest: A Critical History of Economic Theory – Online Library of Liberty
This defection, as may be easily understood, went on more rapidly in the Reformation countries and in those speaking the German language, capita, slowly in countries purely Catholic and in those speaking the Romance tongues.
This theory, in fact, affords a striking instance of how our science has revenged itself for our unscientific treatment of it. The proof from authority intereest thus disposed of, Calvin turns to the rational arguments usually given for the prohibition. In either form, it is a handsome, necessary addition to the complete Free Market library.
In the case where the article in question is not perishable, if the use that is transferred is not to be paid for, the legal transaction is a Commodatum: They would have time recognised as the equivalent for which they receive the surplus income formed by the interest. The “use of capital” is not something apart from the using of the goods which constitute the capital; it is their consumption, fast or slow as the case may be; and a payment for the use of capital is nothing but a payment for the consumption of capital.
In carrying out this principle he lays down a number of exceptions in which interest is not to be allowed. But what had most influence was that, in the sacred writings of the New Testament, were found certain passages which, as usually interpreted, seemed to contain a direct divine prohibition of the taking of interest.
The owner of wealth who devotes it to this latter purpose deserves a compensation for his abstinence from using it in the former, and interest is this compensation. And as every man must be allowed to pursue his own advantage, so far as that is possible without injury to others, natural justice is not opposed to the taking of interest.
ComiXology Thousands of Digital Comics. The national conception, if we except those few objects of immediate consumption lent at interest to other countries, includes merely the produced means of production belonging to a country. The more usurers there are the better; their emulation will press down the rate of interest.
But this is far from saying that Exploitation may not explain a very large amount of that further return to the joint operation of capital and labour which is vaguely called “profit. This movement becomes observable about the middle of the sixteenth century, gathers impetus and power in the course of the seventeenth, and towards its end obtains so distinct an ascendency that during the next hundred years it has only to do battle with a few isolated writers who still represent the canon doctrine.
Its most natural ally, public opinion, which had originally given it the fullest support, began to withdraw from it. The most important of these is that, on grounds of expediency, and on account of prevailing abuses, he acquiesces for the present in the Church’s prohibition of interest pure and simple in the shape of undisguised usury, wishing to retain only the milder and more humane form of annuities,—which, however, he rightly looks on as a “true species of usury business.
The essential difference between the two transactions is that, on 1st January the price of the plane is another similar plane; on the 31st December it is a plane plus a plank.
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Cpaital man who confuses the two problems, or perhaps mistakes the one for the other, and, looking at the matter in this way, forms one opinion upon both, will be apt to confuse the two groups of arguments also, and allow each of them an influence on his total judgment. Thus the Use theory, as put in this illustration, has only to be clearly stated to show that it involves a confusion of thought as regards the word “use.
Men were fighting, as we shall see, not for the centre of the problem, but for an outpost of it which, from a theoretical standpoint, was of comparatively subordinate importance. But these conditions were only fulfilled some thousands of years after men had first expressed their wonder at loan interest “born of barren money.