Volkswirtschaftslehre

[Title Page and Publication Information]: Title page and publication details for Alexander Mahr's 'Volkswirtschaftslehre', second edition, published by Springer-Verlag in 1959. [Preface to the Second Edition]: The author explains the significant expansion of the second edition to reflect post-WWII economic research. He highlights new sections on national income, growth, and indifference curves, while justifying the removal of regional planning. Mahr discusses his pedagogical approach, aiming for clarity for students and practitioners while offering original theoretical insights for specialists. [Table of Contents]: A comprehensive table of contents detailing the ten main sections of the book, covering the nature of economy, production laws, value theory, price formation, income distribution, money, national income/growth, business cycles, economic systems (freedom vs. planning), and international relations. [Chapter 1: The Nature of the Economy]: Mahr defines the economy as the management of scarce resources to satisfy unlimited human needs. He distinguishes between economic theory (causal explanation) and ethics (normative judgment), arguing that needs are 'data' for the economist. The segment explores the 'economic principle' (maximizing utility), the distinction between technical and economic problems, and the nature of individual versus collective/state goals. [Economic Basic Concepts: Goods and Production]: This section defines fundamental economic categories of goods, distinguishing between free and economic goods, as well as consumer and production goods. It explores the evolving definition of production, moving from a narrow focus on material manufacturing to a broader concept that includes services, transportation, and trade, while excluding unpaid household labor and leisure activities. [The Factors of Production: Labor, Land, and Capital]: Mahr details the three traditional factors of production: labor, land, and capital. He emphasizes that labor is a human expression influenced by psychological factors, distinguishing the free worker from the slave. Land is presented as an essential, non-reproducible factor, while capital is introduced as the technical aid that increases labor productivity. [Definitions of Capital: Real and Monetary Aspects]: The text examines the complex definitions of capital, contrasting the 'produced means of production' (real capital) with 'acquisition capital' (wealth used for profit). Mahr critiques purely monetary definitions of capital, arguing that interest stems from the productivity of real goods, and adopts Wieser's distinction between natural and monetary forms of capital. [Profitability vs. Productivity]: This section distinguishes between profitability (monetary return over cost) and productivity (economic utility). Mahr argues that productivity is subjective and varies by worldview, though technical labor productivity can be measured. He highlights cases where profitability and social productivity diverge, such as monopolies or unrewarded scientific inventions. [Organizational Types of the National Economy]: Chapter 3 introduces the national economy as a state-defined entity and outlines two theoretical extremes: the total collective economy (central planning) and the pure market economy. It discusses the model of central administration where a single authority decides on needs and production, referencing the Soviet Union as a modified example with limited consumer choice. [The Pure Market Economy and the Price Mechanism]: Mahr describes the ideal-type liberal market economy where individual self-interest and the price mechanism regulate production. Prices act as signals for scarcity and demand, directing resources toward the most profitable uses. However, the author notes that extreme income inequality can lead to luxury production while basic needs remain unfulfilled. [State Interventionism and Social Policy]: The text traces the shift from pure laissez-faire to state interventionism. It explains how social policy emerged to protect workers from the harshness of competition and how certain industries (railways, utilities) were nationalized for the public good or fiscal reasons, without abolishing the core market structure. [Monopolization and the Decline of Competition]: Mahr analyzes how technical progress and industrial concentration led to the rise of monopolies and cartels, effectively ending pure competition in many sectors. He also notes the rise of trade unions as labor monopolies and the role of protectionist tariffs in facilitating domestic monopolization. [Socialism and Planned Economy Variants]: This section explores socialist critiques of capitalism and various models of socialization. It distinguishes between total planning and 'market socialism,' where socialized production exists alongside consumer choice and price mechanisms. It also notes that planning can occur even while maintaining private property through state control. [Social Market Economy and Business Cycle Management]: Mahr discusses the 'Social Market Economy' (Soziale Marktwirtschaft) as implemented in West Germany. This system combines market principles with active anti-monopoly enforcement, social protection, and state-led business cycle management to ensure full employment and stability, acting as a synthesis of market and interventionist elements. [Bibliography: General Economics and Basic Concepts]: A comprehensive list of academic references for general economics, including introductory works, advanced textbooks, historical classics, and specialized literature on economic systems, needs, and production factors. Key authors cited include Samuelson, Schumpeter, Eucken, and Wieser. [Kapitel 4: Das Gesetz vom abnehmenden Bodenertrag]: This chapter explains the fundamental laws of production returns, focusing on the law of diminishing returns in agriculture. Mahr defines the optimal point of factor combination, distinguishing between increasing, decreasing, and constant returns in physical (natural) terms rather than monetary value. He explains that while technical progress can temporarily suspend the law, the scarcity of land eventually forces production into the zone of diminishing returns. Using a detailed numerical example of a vineyard, the text illustrates how higher product prices incentivize production beyond the physical optimum into the range of increasing marginal costs. The chapter also discusses Ricardo's theory of land quality and Thünen's observations on location and transport costs. [Kapitel 5: Abnehmender Bodenertrag und Bevölkerungsvermehrung]: Mahr examines the relationship between the law of diminishing returns and population growth, specifically addressing Malthusian theory. He acknowledges Malthus's core insight regarding the tendency of population to outpace food supply but critiques Malthus for underestimating technical progress in agriculture and industry. The text analyzes the demographic shift in 20th-century Europe, identifying causes for declining birth rates such as economic depression, higher living standards, and women's entry into the workforce. Mahr argues that while industrialization and trade can mitigate the food supply problem, they cannot permanently compensate for the physical limits of the earth, though current trends suggest 'preventative' checks are already slowing growth in developed nations. [Kapitel 6: Das Gesetz des abnehmenden Ertrages außerhalb der landwirtschaftlichen Produktion]: This section extends the law of diminishing returns to non-agricultural sectors. In mining, it manifests as the depletion of easily accessible or high-quality deposits. In construction, particularly in urban centers, it appears as the increasing marginal cost of building taller structures (skyscrapers) due to structural and safety requirements. In industry, diminishing returns occur when a plant is utilized beyond its optimal capacity, leading to excessive wear on machinery and higher labor costs through overtime or performance premiums. [Kapitel 7: Zunehmender Ertrag durch verbesserte Kapazitätsausnützung]: Mahr discusses the phenomenon of increasing returns (decreasing unit costs) resulting from better utilization of existing industrial capacity. He distinguishes between fixed costs (interest, amortization, maintenance) and variable costs (raw materials, labor). The core argument is based on the 'Law of Mass Production' (Bücher), where fixed costs are spread over a larger number of units, reducing the total cost per unit until the point of optimal capacity is reached. He provides a mathematical formula for unit costs and notes that increasing fixed costs through plant expansion requires a proportional increase in output to remain efficient. [Kapitel 8: Der Einfluß der Betriebsgröße, der Arbeitsteilung und Spezialisierung]: This extensive chapter analyzes how increasing the scale of production leads to lower unit costs through physical efficiencies, specialization, and the division of labor. Mahr discusses the evolution from manual crafts to factory systems, highlighting the assembly line and technical rationalization. He explores the socio-economic impacts of automation and the 'compensation theory' regarding technological unemployment, noting that price elasticity and market monopolies can hinder the re-absorption of displaced workers. Finally, he identifies specific niches where small-scale craft businesses remain superior to large industry, such as personalized goods, repairs, and local services. [Kapitel 9: Konstanter Ertrag und Literaturverzeichnis]: Mahr defines constant returns as the typical state of traditional handicraft production, where expanding output requires a proportional increase in all production factors (labor and materials) without significant fixed-cost advantages. He notes that as crafts adopt machinery and electricity, they transition into industrial forms subject to different return laws. The segment concludes with a comprehensive bibliography of classical and contemporary works on production theory, including authors like Clark, Edgeworth, Morgenstern, and Schneider. [Older Value Theories: From Aristotle to Adam Smith]: This section introduces the historical development of value and price theories in economics. It distinguishes between use value and exchange value, noting that early theorists struggled to reconcile the high utility of goods like water with their low market price. It focuses on Adam Smith's distinction between 'natural price' (determined by production costs like labor, rent, and interest) and 'market price' (determined by supply and demand). [David Ricardo and the Refinement of Cost-Value Theory]: Detailed analysis of David Ricardo's contributions to classical value theory. Ricardo eliminated ground rent as a price-determining factor, viewing it instead as a result of price formation driven by the cultivation of less fertile land. He emphasized labor as the primary source of value and introduced a theory of wages based on the physiological subsistence minimum (the 'natural' wage), which gravitates toward the cost of maintaining the labor force. [The Radicalization of Labor Value: Mill, MacCulloch, and Marx]: Explores the transition from classical cost theory to the labor theory of value. James Mill and MacCulloch attempted to reduce all capital costs to 'stored labor.' Karl Marx further radicalized this by defining value as the 'substance' of socially necessary labor time. Marx used this framework to develop his theory of surplus value, arguing that the difference between the value produced by labor and the subsistence wage constitutes exploitation by the capitalist class. [Critique of the Cost-Value Theory]: A critical evaluation of cost-based value theories. The author argues that cost theories fail to explain prices in monopolies, ignore the reality of varying costs between different firms (marginal vs. intra-marginal firms), and overlook how demand influences which production costs are actually relevant. It concludes that costs do not determine prices unilaterally; rather, prices and marginal costs are mutually determined within the market process. [The Subjective Theory of Value and Marginal Utility]: This section details the 'marginal revolution' led by Gossen, Menger, Jevons, and Walras. It explains that value is not inherent in goods but depends on the subjective importance an individual assigns to a specific unit of a good to satisfy their least urgent need (marginal utility). It resolves the 'diamond-water paradox' by emphasizing the relationship between utility and scarcity, and introduces Gossen's first law regarding the diminishing intensity of satisfaction. [The Law of the Marginal Utility Level and Its Critique]: The author critiques the 'Law of the Marginal Utility Level' (Gossen's Second Law), which suggests consumers distribute income so that the last unit of currency yields equal utility across all goods. Drawing on Hans Mayer, the author argues this fails to account for qualitative shifts in consumption (e.g., moving from bread to luxury goods as income rises) and the fact that for many goods (like necessities for the wealthy), marginal utility remains far above the marginal utility of money. [The Method of Indifference Curves]: Mahr introduces the method of indifference curves as an alternative to marginal utility theory, tracing its origins to Pareto and Edgeworth. He explains the graphical representation of indifference levels and the budget line (Bilanzgerade) to determine consumer equilibrium at the point of tangency. [Critique of the Indifference System]: A detailed critique of indifference theory, primarily drawing on Hans Mayer's arguments. Mahr argues that the assumption of infinite substitutability is unrealistic and that consumers typically seek a single optimal combination rather than being indifferent between extremes. He also discusses the influence of advertising and the difficulty of applying these models to durable luxury goods. [Time and Uncertainty in the Economy]: Exploration of the role of time in economic decision-making. Mahr contrasts Böhm-Bawerk's theory of systematic undervaluation of future needs with Wieser's more pragmatic view of income periods. He discusses how expectations of price changes lead to intertemporal substitution and how modern social policy mitigates individual risks. [Entrepreneurial Expectations and Economic Prognosis]: Analysis of uncertainty in production and the limits of economic forecasting. Mahr distinguishes between measurable risk and unmeasurable uncertainty (Knight), critiques the assumption of perfect foresight using Morgenstern's Sherlock Holmes paradox, and explains how public economic forecasts can become self-fulfilling or self-defeating prophecies. [Bibliography for Value and Utility Theory]: A comprehensive list of academic references covering value theory, utility, indifference analysis, and time in economics, featuring key works by Menger, Walras, Pareto, Hicks, and the Austrian School. [Elementary Principles of Price Formation]: Introduction to price theory, starting with isolated exchange and auctions before moving to competitive market prices. Mahr explains how the equilibrium price is determined by the intersection of marginal demand (the 'marginal layer' of buyers) and marginal production costs. [Kapitel 17: Gesamtkosten, Durchschnittskosten und Grenzkosten]: This chapter defines and analyzes the relationship between total, average, and marginal costs within a modern industrial enterprise. Mahr explains how fixed costs lead to falling unit costs as production expands, until the point of optimal capacity utilization is reached, after which marginal and average costs begin to rise. He provides a numerical example and graphical representations (U-shaped vs. linear cost curves) to illustrate how entrepreneurs determine production volume based on the relationship between market price and marginal costs, while noting that average costs determine long-term business viability. The text also discusses modern modifications to cost theory by thinkers like Gutenberg and Schneider regarding linear cost curves in large-scale industry. [Kapitel 18: Die Elastizität der Nachfrage]: Mahr explores the elasticity of demand, distinguishing between elastic, inelastic, and unit elasticity (elasticity of one). He demonstrates how price changes affect total consumer expenditure differently depending on the degree of elasticity, using examples like bread (inelastic) and automobiles (elastic). The chapter further defines income elasticity—explaining how demand shifts relative to changes in real income—and cross-elasticity, which measures the impact of one good's price change on the demand for another. Graphical representations of demand curves and total revenue curves are provided to illustrate these concepts. [Kapitel 19: Marktformen und Verhalten der Marktparteien]: This chapter classifies market forms based on the number of participants (monopoly, oligopoly, polypoly) and the nature of competition. Mahr critiques the term 'monopolistic competition' (Chamberlin), preferring 'differentiated market' to describe scenarios where price differences persist despite similar goods. He emphasizes that 'perfect competition' is not just a structural market form but a specific behavior of market participants characterized by the absence of personal preferences. The section also touches upon collective monopolies (cartels/trusts) and the concept of the 'dominating firm' (Perroux). [Kapitel 20: Die Preisbildung bei vollständiger Konkurrenz]: Mahr explains price formation under perfect competition, where the market price is determined by the intersection of supply (marginal costs) and demand curves. For the individual entrepreneur in a polypoly, the price is a fixed parameter, and they expand production until marginal costs equal that price. The chapter discusses how shifts in income, tastes, or production costs move the equilibrium price. Finally, Mahr acknowledges the limits of static equilibrium analysis, noting that in a dynamic economy, the law of diminishing costs leads to a continuous selection process where larger firms displace smaller ones. [Kapitel 21: Die Preisbildung bei unvollständiger Konkurrenz]: Mahr defines imperfect competition as a market state where price differences persist beyond cost differences due to spatial, objective, or personal factors. He explains how product differentiation, branding, and advertising create localized monopolies where demand is relatively inelastic within a certain price range. The section includes a graphical analysis (Abb. 23) showing how firms in differentiated markets maximize profit by setting prices where the difference between total revenue and total cost is greatest, rather than at marginal cost. [Kapitel 22: Der Monopolpreis - Grundlagen und Arten des Monopols]: This section introduces the theory of monopoly pricing, distinguishing between complete and incomplete monopolies, as well as supply and demand monopolies. Mahr categorizes monopolies into natural (resource-based), legal (patents, concessions, state monopolies), and social (cartels, trusts). Using the example of Cournot's mineral spring, he demonstrates how a monopolist seeks the 'Cournot point'—the price-quantity combination that maximizes net profit—noting that the monopolist can control either price or quantity, but not both simultaneously. [Einfluss von Kosten und Steuern auf den Monopolpreis]: Mahr analyzes how different cost structures and external factors affect monopoly pricing. He argues that fixed costs do not influence the profit-maximizing price-quantity combination, whereas an increase in variable costs (e.g., raw materials or wages) typically leads to higher prices and lower output. He discusses the implications for tax policy, noting that profit taxes are not passed on to consumers, while per-unit taxes are. Furthermore, he critiques union wage demands in monopolized sectors, suggesting they often lead to price hikes or automation-driven unemployment. [Grenzerlös, Grenzkosten und Nachfrageelastizität im Monopol]: A technical analysis of monopoly equilibrium where marginal revenue equals marginal cost. Mahr uses graphical representations (Abb. 24 & 25) to show the relationship between total revenue and total cost curves. He addresses the theoretical paradox of inelastic demand, explaining why monopolists don't restrict supply to a single unit: in reality, demand eventually becomes elastic at extreme prices, and the threat of substitutes or state intervention limits the exploitation of monopoly power. [Preisdifferenzierung und Dumping]: Mahr examines price discrimination (classification of demand), where a monopolist charges different prices to different groups or at different times. Examples include railway tariffs, electricity rates for light vs. power, and staggered pricing for patented goods or books. He also defines 'dumping' as selling abroad at lower prices than domestically, often to conquer markets or maintain employment by covering only variable costs while domestic sales cover fixed costs. [Monopolistische Zusammenschlüsse: Trusts und Kartelle]: This section compares centralized monopolies (trusts) with decentralized cartels. While a trust can rationally shut down inefficient plants to optimize production, cartels face internal friction. Mahr cites Stackelberg regarding the danger of overproduction in pure price cartels. He describes the 'quota struggles' within cartels, where members fight for production shares, and the economic inefficiency of allowing weak firms to survive by selling their quotas to more efficient ones. [Vergleich von Konkurrenz- und Monopolpreisbildung]: Mahr compares the outcomes of perfect competition versus monopoly, demonstrating that monopolies result in higher prices and lower quantities because marginal revenue is lower than price. However, he notes a historical paradox: despite increased monopolization since the 1870s, industrial prices did not skyrocket as expected. He attributes this to the simultaneous reduction in costs through technical progress and mass production, which offset the upward pressure of monopoly pricing. [Kapitel 23: Die Preisbildung bei unvollständigem Angebotsmonopol]: This chapter discusses incomplete monopolies where a dominant producer faces small competitors or the threat of potential entry. Referencing Hans Mayer, Mahr explains that monopolists often keep prices below a certain threshold to prevent 'outsiders' from entering the market or to avoid the rise of substitute goods. He uses the German potash industry and protective tariffs as examples of how external limits and the threat of foreign competition constrain monopoly power. [Die Preisbildung bei Oligopolen auf Seite des Angebots]: This chapter examines price formation in supply-side oligopolies, characterized by a few dominant sellers. Mahr distinguishes between 'ruinous competition' (cut-throat competition) aimed at driving out competitors and collective monopolies formed through cartels or tacit agreements. He discusses how price stability often emerges from mutual interest, referencing Chamberlin's theories, and explains how demand elasticity influences whether prices align with marginal costs or monopolistic optimums. The text also addresses why profits can persist under competition due to time lags in capacity expansion and investment risks. [Marktdynamik und Realbeispiele des Oligopols]: Mahr analyzes the practical prevalence of oligopolies in modern industry and transport, particularly in the US where legal barriers prevent formal cartels. Using the American automobile industry (Ford and General Motors) as a primary example, he illustrates how oligopolists compete through technical improvements rather than price wars. He also notes that while oligopolies are more flexible than cartels in adapting to economic shifts, they still showed significant price rigidity during the Great Depression. [Die Preisbildung bei sonstigen Marktformen: Bilaterales Monopol und Verwaltungsmonopole]: This section explores complex market forms including bilateral monopolies (mutual monopolies), where both supply and demand are monopolized, such as in labor negotiations or specific agricultural sectors like sugar beets. Mahr explains that in these cases, the price is theoretically indeterminate within a range defined by production costs and maximum utility. He also introduces 'monopoloids' (unexploited monopolies) and distinguishes between state-run 'financial monopolies' (profit-oriented) and 'administrative monopolies' (service-oriented, like the post office or public transport) which prioritize social welfare over profit. [Behördliche Preisfestsetzungen]: Mahr details state intervention in pricing through various forms of 'taxen' (price controls). He distinguishes between 'order taxes' (to stabilize fragmented markets like taxis) and 'true taxes' (maximum, minimum, and fixed prices). The text analyzes the economic consequences of these measures, emphasizing that maximum prices during shortages require rationing and cost controls to be effective. Finally, he critiques the concept of the 'just price' (gerechter Preis), noting the difficulties in applying it to industries with varying production costs without protecting inefficiency. [Die Interdependenz der Preise]: This section discusses the general interdependence of prices, arguing that no price is formed in isolation. Mahr explains how changes in the price of essential mass-market goods affect the demand for luxury items through income effects. He categorizes specific interdependencies: production kinship (using the same raw materials), joint production (e.g., wheat and straw), complementarity (e.g., cars and fuel), and substitutability. Crucially, he challenges the classical view that production costs determine product prices, arguing instead that product prices (derived from consumer utility) logically determine the value of production factors, especially specific ones. [The Pricing of Factors of Production (Chapter 28)]: This chapter examines the complex problem of pricing factors of production (land, labor, and capital). It contrasts classical theories, like Ricardo's land rent, with modern approaches that derive factor value from the marginal utility of consumer goods. A significant portion is dedicated to Friedrich von Wieser's formulation of the 'imputation problem' (Zurechnungsproblem) and John Bates Clark's marginal productivity theory. The text discusses the technical requirements for these theories, such as the substitutability of factors and linear homogeneous production functions, while critiquing the notion of 'economic causation' in factor shares. [The General Interdependence of Prices and Economic Production (Chapter 29)]: Building on Hans Mayer's work, this chapter describes the overall systemic connection between consumer demand, product prices, and factor prices. It explains how entrepreneurs allocate scarce resources to the most profitable uses based on consumer preferences and purchasing power. The text addresses the relationship between production costs and prices, arguing that high costs are incurred because high product prices make them worthwhile, rather than costs determining value. It also touches upon factor pricing in monopolies and the necessity of 'value imputation' even in non-market or planned economies. [The Role of Interest in Factor Pricing and Bibliography]: This segment concludes the discussion on factor pricing by clarifying the role of interest, defining it as the return on money capital rather than just physical capital goods. It emphasizes that interest is a cost factor for entrepreneurs regardless of whether they use debt or equity. The segment is followed by an extensive bibliography of key economic texts from authors such as Clark, Hicks, Marshall, Pareto, and Schneider, and concludes with the heading for the next major section on income distribution. [Introduction to Income Theory and Wage Formation]: Mahr introduces the theory of income distribution, distinguishing between functional distribution (returns to factors of production) and personal distribution (income per individual). He adopts the traditional four-fold classification of income: wages, ground rent, interest, and entrepreneurial profit, focusing specifically on the definition of wages for both dependent and independent labor. [Wage Determination under Perfect Competition]: The text explores wage formation under perfect competition, defining the distinction between nominal and real wages. It explains that in a competitive market, wages are determined by the marginal productivity of labor, as first recognized by Heinrich von Thünen, and discusses how unemployment or the physiological subsistence level acts as a lower bound for wage rates. [Imperfect Competition and the Rise of Trade Unions]: Mahr analyzes how real-world labor markets deviate from perfect competition due to spatial constraints, limited labor mobility, and the presence of demand oligopolies or monopolies by employers. He discusses the historical necessity of trade unions to counter employer power and mentions Cassel's observations on labor fluctuations between agriculture and industry during business cycles. [Economic Effects of Union Wage Policies]: This section evaluates the impact of trade union policies on the economy. While acknowledging their role in improving working conditions and social security, Mahr warns that pushing wages above marginal productivity can lead to unemployment, reduced production, and forced technical rationalization (replacing labor with capital), particularly in labor-intensive industries. [Arbitration, State Intervention, and the 'Just Wage']: Mahr discusses the limitations of arbitration and state-mandated wage setting, arguing that such measures often require broader economic controls incompatible with a free market. He critiques the concept of the 'just wage,' examining various interpretations based on effort, need, or utility, and provides a detailed critique of Thünen's mathematical formula for a natural wage. [Wage Forms and Regional/Occupational Differences]: The final section of the chunk details different methods of wage payment, including time wages, piece rates (Akkordlohn), and profit sharing. It also explains regional wage disparities (citing the USA as an example of high marginal productivity) and occupational differences based on training, skill, and the psychological satisfaction derived from certain intellectual professions. [Kapitel 31: Die Grundrente (Ground Rent)]: This chapter provides a comprehensive analysis of ground rent, distinguishing between agricultural and urban forms. Mahr explains the classical concepts of differential rent based on fertility (Ricardo) and location (Thünen), while also defining absolute rent and intensity rent—the latter resulting from increased capital/labor input on a fixed area. He discusses how urban ground rent is derived from location advantages and building height (intensity), and how government interventions like rent control in Vienna can eliminate ground rent. Finally, he explains the capitalization of rent into land value and the role of speculation. [Bodenbewertung und Grundstücksspekulation]: Mahr details the mathematical relationship between annual rent and land value through capitalization at the prevailing interest rate. He explores why market prices deviate from theoretical values, citing individual differences in assessment, the role of entrepreneurial profit versus pure rent, and urban land speculation based on expected future rent increases. [Kapitel 32: Terminologische und sonstige Vorbemerkungen zur Zinstheorie]: Mahr introduces interest theory by defining capital, saving, and investment, explicitly distinguishing his definitions from the Keynesian identity of S=I. He argues against the Keynesian view that saving and investment are necessarily equal ex-post, citing critiques by Lutz, Haberler, and Robertson. Mahr defines 'hoarding' (Horten) as income neither consumed nor invested. He also critiques the 'liquidity preference' theory, arguing that interest is more than just a reward for parting with liquidity, especially in long-term production investments where entrepreneurs prioritize capital preservation over liquidity. [Interest Formation on the Investment Market: Theories and Demand Factors]: Mahr examines the formation of interest rates on the investment market, focusing on the long-term net interest rate. He discusses the origins of interest, referencing Böhm-Bawerk's theories on the productivity of capital and the 'roundabout' methods of production. The demand side is analyzed, identifying three main sources: private enterprises seeking investment capital, public entities (states) for consumption or infrastructure, and the housing market. He defines the interest rate as corresponding to the marginal productivity of capital and explains how time-distance between production costs and final product value necessitates a productivity interest. [The Universal Interest Rate and Capital Valuation]: This section explains how the market interest rate serves as a universal benchmark for valuing all long-term assets. Mahr details the mathematical process of capitalization and discounting, where the value of an asset (like land or factory equipment) is the sum of the present values of its future expected yields. He also distinguishes between regular market interest and usury, which occurs in isolated, non-competitive market conditions. [The Influence of Interest Rates on Saving and Capital Formation]: Mahr critiques the 'abstinence theory' of interest, arguing that the interest rate's effect on the volume of savings is ambiguous. He identifies several primary motives for saving (old-age provision, reserves, family security, power) and notes that while higher interest makes reaching a goal easier, it might actually lead to lower current savings for those with fixed future targets. Conversely, for rentiers, lower interest reduces income and thus the ability to save. He concludes that income levels, rather than interest rates, are the primary determinant of the total volume of savings. [Interest Rates and Asset Allocation: Hoarding, Real Assets, and Land Values]: Mahr explores the consequences of extremely low interest rates, arguing they lead to hoarding, excessive investment in real assets (like housing), and a massive inflation of land values. He critiques Keynes's liquidity preference theory, suggesting interest is not just a premium for surrendering liquidity but an 'investment premium' necessary to incentivize productive capital formation over non-productive asset holding. He argues that a net interest rate of zero is impossible in a market economy because it would exhaust the supply of loanable funds. Finally, he notes that even a socialist economy experiences 'original interest' as a surplus from capital use, though its distribution differs. [Kapitel 34: Die Zinsbildung auf dem Geldmarkt]: This chapter examines the divergence between short-term money market interest rates and long-term investment market yields. Mahr explains that these differences arise from seasonal demand fluctuations and cyclical economic shifts, noting that borrowers choose credit terms based on the duration of their needs rather than just the interest rate. He argues that perfect interest rate equalization is prevented by transaction costs, liquidity requirements of banks, and the inherent risks and uncertainties that limit speculative arbitrage between the two markets. [Kapitel 35: Der Unternehmergewinn]: Mahr provides a comprehensive analysis of entrepreneurial profit, distinguishing it from 'entrepreneurial wages' and 'entrepreneurial interest' on personal capital. He identifies six distinct types of profit: performance profit (based on innovation and talent), enterprise rent (capitalized reputation), windfall profit (luck/conjuncture), marginal profit (cost differentials), unfair profit (exploitation), and restriction profit (monopoly/oligopoly). He discusses the role of the entrepreneur as a driver of economic dynamics, referencing Schumpeter's innovations and Wieser's view on the combination of talent and capital. [Literaturverzeichnis zum Sechsten Abschnitt]: A comprehensive bibliography of German and international economic literature covering wages, interest, capital, and entrepreneurial profit. Includes key works by the Austrian School (Böhm-Bawerk, Hayek, Wieser, Mahr), the Lausanne School (Cassel), and Anglo-American theorists (Clark, Fisher, Knight, Marshall, Robinson). [Sechster Abschnitt: Das Geld. Kapitel 36: Wesen und Arten des Geldes]: This section introduces the nature and types of money, defining it as a general means of payment. Mahr traces the historical evolution from natural exchange to precious metals, the invention of coinage, and the development of banknotes and fiduciary media. He discusses the transition from commodity-backed money to paper currencies, citing historical examples like the Austrian silver currency and Gresham's Law. The chapter also covers modern banking mechanisms, including deposits, checks, giro transfers, and clearing houses. [Kapitel 37: Die Goldwährung]: This chapter examines the history and mechanics of the gold standard, distinguishing between pure gold circulation, gold bullion, and gold exchange standards. Mahr analyzes the theoretical conflict between the Currency Theory (advocating strict metallic backing) and the Banking Theory (emphasizing elasticity based on commercial needs). He provides a detailed explanation of how central bank discount policy influences domestic prices, inventory levels, and international capital flows to maintain balance of payments. The section concludes with a critique of the 'automatic' gold standard versus the 'manipulated' gold standards of the interwar period, noting how the latter allowed for more domestic economic autonomy but led to competitive devaluations. [Entwicklung der Goldwährung nach dem Ersten Weltkrieg]: Mahr discusses the transition to manipulated gold currencies after WWI, focusing on the US experience with gold inflation and the shift away from automatic metallic regulation. He explains how gold's function evolved from a primary regulator of money supply to a reserve instrument for international settlements, particularly within the framework of the European Payments Union. [Kapitel 38: Der Geldwert]: This chapter explores the value of money, distinguishing between subjective exchange value, objective purchasing power, and exchange rates. Mahr critiques the 'naive' quantity theory and introduces Irving Fisher's equation of exchange, emphasizing the role of velocity and the distinction between transaction and income equations (referencing Schumpeter and the Cambridge school). He then presents Wieser's income theory of money, which roots price changes in individual valuations and income levels rather than just mechanical quantities. The final part of the chapter defines inflation and deflation, detailing their socio-economic consequences for debtors, creditors, and production levels, while explaining the self-reinforcing 'vicious cycles' associated with both phenomena. [Kapitel 39: Die Wege der Geldschöpfung]: This chapter examines the mechanisms of money creation by central banks and commercial banks. It details central bank instruments such as discount policy, open market operations, and minimum reserve requirements, noting how their effectiveness has changed since WWI due to shifts in corporate financing and international capital mobility. The text provides a mathematical derivation of the deposit multiplier (Giralgeldmultiplikator), accounting for cash leakages and reserve ratios, and explains the process of credit expansion and contraction within the banking system. [Der Prozeß der Giralgeldschöpfung und -vernichtung]: A detailed technical explanation of how commercial banks create scriptural money (Giralgeld) through lending and securities purchases. The author defines the credit multiplier formula, incorporating the reserve ratio and the public's cash preference. It also discusses the 'negative' multiplier effect during credit contractions or bank runs, emphasizing that these processes are bounded by profitability, creditworthiness, and central bank liquidity constraints. [Literaturverzeichnis zum Sechsten Abschnitt]: A comprehensive bibliography of monetary theory and banking literature, featuring key works by authors such as Keynes, Wicksell, Fisher, Hayek, Mises, Schumpeter, and various German-language economists of the early 20th century. [Siebenter Abschnitt: Das Volkseinkommen und seine Veränderungen im wirtschaftlichen Wachstumsprozeß]: This section introduces the concept of national income as the central pillar of modern macroeconomic analysis. It distinguishes between nominal (monetary) and real income (social product), defines the circular flow of income, and explains the role of the state (public consumption) and transfer payments. The text also outlines modern accounting methods, including national accounting (volkswirtschaftliche Buchführung), national budgeting (ex-ante forecasting), and Leontief's input-output analysis for mapping inter-industry transactions. [Methoden der volkswirtschaftlichen Gesamtrechnung (Fortsetzung)]: Continuation of the discussion on Leontief's input-output analysis, focusing on the requirements for detailed statistical data and the expansion of the model from the production sector to include other economic sectors. [Kapitel 41: Die stationäre Volkswirtschaft]: Definition and analysis of the stationary economy, where all relevant aggregates (population, production, consumption, income) remain constant over time. The author distinguishes 'stationary' from 'static' (equilibrium) using Ragnar Frisch's definitions. It explores the conditions for stationarity—such as lack of net investment and saving—and uses the European Middle Ages as a historical approximation of this ideal type, noting how such systems reacted to exogenous shocks. [Kapitel 42: Die wachsende Volkswirtschaft]: This chapter contrasts simple linear growth (driven solely by population increase) with the dynamic growth of modern market economies driven by technical progress and expanding consumer needs. The author discusses the historical shift during the Industrial Revolution, the role of risk and innovation, and the alternative of a centrally planned economy. It concludes by highlighting that modern growth requires a balance between increasing demand, production expansion, and investment, which are not automatically guaranteed in a free market. [Kapitel 43: Die Lehre vom Gleichgewichtseinkommen der Wirtschaft]: Mahr examines the concept of equilibrium income in a growing economy, contrasting the static 'equilibrium' with the reality of 'balanced growth'. He critiques post-Keynesian models, specifically referencing Paul Samuelson's graphical and tabular representations of income determination, arguing that a truly growing economy requires investments to exceed savings through monetary expansion to avoid stagnation or a return to a stationary state. [Kapitel 44: Der Investitionsmultiplikator]: This chapter traces the history and mechanics of the investment multiplier, attributing its origins to Kahn and Johannsen before its popularization by Keynes. Mahr provides the mathematical derivation of the multiplier based on the marginal propensity to consume and discusses its relationship with the velocity of money circulation, arguing that in a healthy growing economy, the multiplier effect is sustained by credit expansion rather than just past savings. [Kapitel 45: Das Akzelerationsprinzip]: Mahr explains the acceleration principle (accelerator), which describes how changes in consumer demand lead to disproportionately large fluctuations in the demand for capital goods. Using numerical examples, he demonstrates why investment industries suffer most during a slowdown in growth and how existing industrial capacity affects the timing of the accelerator's impact during an economic upswing. [Kapitel 46: Die wahre Bedeutung des Sparens und Investierens in einer gleichmäßig wachsenden Wirtschaft]: This section analyzes the balancing function of savings in preventing inflation during long-term investment projects (like power plants or housing) that create income without immediate consumer goods output. Mahr argues that while short-term production expansion should be financed by credit, long-term capital-intensive projects require a corresponding increase in savings to maintain price stability, though a total reliance on savings would prevent income growth. [Kapitel 47: Die adäquate Darstellung des Entwicklungsganges in einer gleichmäßig wachsenden Wirtschaft]: Mahr concludes by formalizing the relationship between monetary expansion and economic growth. He provides formulas for linear and exponential growth of national income, emphasizing that growth requires an increase in the money supply. He also accounts for the role of cash reserves (hoarding and de-hoarding) in cyclical fluctuations, noting that while these are 'alien' to the ideal of balanced growth, they are critical factors in real-world economic cycles. [Monetary and Real National Income]: Mahr examines the relationship between monetary and real national income, focusing on how price level stability determines whether nominal growth reflects actual production increases. He analyzes six scenarios involving varying demand elasticities and cost structures (rising or falling costs) to demonstrate how price changes in one sector affect the general price level. The segment concludes by introducing the concept of 'neutral money' as defined by Hayek and its theoretical implications for economic stability. [Neutral or Value-Stable Money?]: This chapter critiques the concept of 'neutral money' (keeping the money supply constant), arguing that it would trigger severe depression in a growing economy due to deflationary pressure and rigid costs. Mahr contrasts this with 'value-stable money' (index-based stabilization), discussing the practical failures of the 1920s US policy and the role of the 1929 stock market crash. He explores how monopolistic price and wage policies complicate monetary stabilization and proposes a modified value-stability policy that allows for price changes driven by natural production conditions while compensating for monetary fluctuations. [Bibliography for National Income and Economic Growth]: A comprehensive list of academic literature cited or recommended regarding national accounting, income analysis, and economic growth theories. Includes works by prominent economists such as Keynes, Kuznets, Domar, Harrod, and Samuelson, covering both German and international scholarship up to the late 1950s. [Kapitel 50: Die Konjunkturzyklen - Definitionen und Phasen]: Mahr defines and distinguishes between different types of economic changes: steady growth, structural changes, seasonal fluctuations, and business cycles (Konjunkturzyklen). He argues that business cycles are typical of liberal competitive economies, characterized by irregular but periodic waves of expansion and contraction. The text contrasts the self-healing powers of competitive systems with the stagnation tendencies of monopoly capitalism, citing Röpke. It also outlines the four traditional phases of a cycle: upswing, boom (Hochkonjunktur), crisis, and depression. [Der Mechanismus des Konjunkturaufstiegs: Multiplikator und Akzelerator]: This section details the transition from the trough of a depression to an economic upswing. Mahr explains how low costs (wages and materials) and low interest rates eventually make investments in housing and new technologies profitable again. He describes the role of the 'multiplier' effect, where initial investments create a chain of income and consumption, and the 'acceleration principle' (Akzelerationsprinzip), where rising consumer demand leads to over-proportional growth in the capital goods industry. [Die Ursachen des Umschwungs: Überproduktion und Sparverhalten]: Mahr analyzes the internal contradictions that lead from boom to crisis. Drawing on Sismondi and Keynes, he discusses how uncoordinated competitive investment leads to overproduction. A central theme is the gap between income and consumption caused by saving and hoarding. He explains that during an upswing, profits and savings grow disproportionately, eventually leading to a lack of consumer demand or a diversion of capital into stock market speculation (Börsenspekulation) rather than productive investment, which triggers the downturn. [Endogene und exogene Faktoren sowie Monopolkonjunktur]: This section distinguishes between endogenous (system-inherent) and exogenous (external, e.g., wars, harvests) causes of cycles. It then focuses on the specific behavior of monopolistic economies (like Germany or the US in the interwar period). Mahr argues that monopolies and unions create price and wage rigidity (Starrheit). While this might slow price increases during a boom, it prevents the necessary price adjustments during a crisis, leading to deeper production cuts and mass unemployment instead of price corrections, thus disabling the economy's self-healing mechanisms. [Kapitel 51: Konjunkturelle Wirtschaftslenkung - Geldpolitik]: Mahr discusses tools for economic stabilization, starting with central bank interventions: discount policy, open market operations, and minimum reserve requirements. He debates the timing of these measures, arguing that the central bank should aim for price stability once full employment is reached to prevent inflationary bubbles. He critiques Albert Hahn's 'cheap credit' policy in high booms, suggesting it leads to unsustainable inflation rather than permanent prosperity. [Fiskalpolitik: Öffentliche Investitionen und Budgetgestaltung]: When monetary policy fails, especially in monopolistic depressions, state intervention via public investments is required. Mahr advocates for 'deficit spending' and a 'cyclical budget balance' (zyklischer Budgetausgleich), where the state runs deficits during depressions to stimulate demand and pays off debt during booms. He critiques alternative approaches like 'deficit without spending' (tax cuts), noting that tax cuts in a depression might lead to hoarding rather than consumption. He also cites Wilhelm Weber regarding the uncertainty created by frequent tax rate changes. [Structural Changes and Budgetary Policy]: Mahr discusses the effectiveness of budgetary measures in addressing structural unemployment versus cyclical downturns. He warns that public investment can exacerbate issues if unemployment is caused by monopolistic price/wage policies or general uncompetitiveness, potentially leading to inflation. He also notes that in cases of severe resource scarcity (e.g., post-WWII), deficit spending is dangerous and taxation-funded public works are preferable. [The Stagnation Thesis and Mature Economies]: An analysis of Alvin Hansen's stagnation thesis regarding 'mature economies' where savings tend to exceed private investment. Mahr outlines arguments for this trend, including slowing population growth and a lack of attractive investment opportunities, but critiques the thesis by pointing out how post-WWII reconstruction and technological needs have fundamentally altered the investment landscape. [Bibliography for Business Cycles and Employment]: A comprehensive list of academic literature regarding business cycles, economic fluctuations, and employment theory, featuring major 20th-century economists such as Keynes, Schumpeter, Haberler, and Hansen. [The Principle of State Non-Intervention (Laissez-Faire)]: Mahr evaluates the classical liberal principle of non-intervention. While acknowledging its role in the industrial growth of the 19th century, he critiques its failures, including recurring economic crises, extreme social inequality, the exploitation of labor (including women and children), and the inherent tendency of free competition to devolve into monopolies. He introduces Neoliberalism as a movement seeking state intervention to preserve market competition. [Basic Problems of Planned Economy and Socialism]: A deep dive into the ideological and practical challenges of socialism and central planning. Mahr uses Max Weber's distinction between value judgments and scientific analysis to frame the debate. He extensively discusses Friedrich A. Hayek's critique that total planning is incompatible with democracy and personal freedom. Mahr argues that state control of all jobs leads to political corruption and the erosion of dissent, as the state becomes the sole employer and can enforce ideological conformity through economic pressure. [Kapitel 55: Der Kampf gegen den Mißbrauch monopolistischer Machtstellungen]: This chapter examines the economic and social damages caused by private monopolies, such as artificial scarcity and unemployment, and discusses strategies for state intervention. Mahr evaluates three primary methods: legal prohibition of cartels (referencing the Sherman Act and German/Austrian laws), the reduction of protective tariffs to encourage foreign competition, and direct price monitoring based on cost audits. The text also addresses the role of trade unions as labor monopolies, suggesting that while their self-protection function is vital, their power can exacerbate crises; he concludes that maintaining monetary stability and competitive frameworks is the best way to ensure labor peace and economic efficiency. [Kapitel 56: Zur sozialökonomischen Funktion des Unternehmertums und des Privateigentums an den Produktionsmitteln]: Mahr discusses the socio-economic necessity of the entrepreneur and private property, contrasting the high-stakes initiative of the owner-entrepreneur (citing Von Thünen) with the lower motivation of salaried administrators or monopolists. He argues against stagnation theorists who favor luxury consumption, demonstrating instead that reinvested profits are the primary driver of rising real wages and mass prosperity. The section critiques high progressive taxation (e.g., in the US, Germany, and Austria) for stifling capital formation and advocates for tax reforms that favor investment, stock ownership, and savings to decentralize economic power and preserve political freedom. [Literaturverzeichnis (Abschnitt IX)]: A comprehensive bibliography of academic literature related to economic systems, planning, competition, and state intervention. It includes seminal works by authors such as Keynes, Hayek, Schumpeter, Mises, Röpke, and various reports from the Temporary National Economic Committee. [Exchange Rates and the Tendency Toward Balance of International Payments]: This section examines the factors determining exchange rates and the mechanisms that drive international payments toward equilibrium. It distinguishes between gold-standard currencies, where rates are constrained by 'gold points' (transport costs), and other currencies where rates fluctuate based on the balance of payments. The author notes that while the pre-WWI gold standard functioned almost automatically, post-war disruptions necessitated more active central bank interventions like discount policy and foreign exchange controls. [Instruments of Balance of Payments Policy and the Structure of the Balance]: Mahr discusses the tools used to manage balance of payments deficits, including discount policy, direct trade interventions (tariffs, quotas), and exchange controls. He provides a detailed breakdown of the balance of payments into current accounts (trade, services, income, transfers) and capital accounts, emphasizing that the actual flow of payments, rather than just claims and liabilities, determines the currency's value in a competitive market. [The Theory of Individual Balances and the Multiplier Effect]: The text explores the theoretical foundations of balance of payments equilibrium, starting with Friedrich von Wieser's theory that national balance is the sum of individual economic balances. Mahr expands this using a mathematical model of income groups (exporters, importers, and domestic-only) to show how income and expenditure must balance. He then introduces the foreign trade multiplier, explaining how changes in exports or imports trigger income effects that eventually restore equilibrium, though often at the cost of significant changes in national income. The concept of 'foreign repercussion' (Machlup) is integrated to show how interactions between two trading nations accelerate the adjustment process. [Monetary Disturbances, Purchasing Power Parity, and Exchange Controls]: This section analyzes how monetary policy (inflation/deflation) and price effects impact exchange rates. It critiques the 'Purchasing Power Parity' theory (Wheatley, Cassel, Keynes), arguing that while it provides a baseline, it fails to account for non-tradable goods, transport costs, protectionism, and speculative 'currency dumping' during hyperinflation. Mahr also discusses the risks of flexible exchange rates, noting that while they offer domestic flexibility, they introduce uncertainty that can stifle international trade and capital flows. [The Theory of Comparative Costs]: Mahr introduces the fundamental principles of international trade, starting with Adam Smith's division of labor and moving to David Ricardo's theory of comparative costs. He explains that even if a country is absolutely less efficient in all production sectors, it can still benefit from trade by specializing in goods where its disadvantage is smallest. Using a modified example of linen and steel production between England and Belgium, he demonstrates that relative price differences and wage adjustments allow for mutually beneficial trade, maximizing global material welfare. He concludes by noting Gottfried Haberler's extension of the theory to multiple goods. [Kapitel 59: Die Frage der Gegenseitigkeit im Freihandel]: Mahr examines whether the benefits of free trade apply when only one country adheres to it while others remain protectionist. He analyzes the historical case of 19th-century England, noting that unilateral free trade succeeded then due to moderate foreign tariffs and British industrial superiority. However, he argues that in the modern era of rigid wages and high protectionism, unilateral free trade can lead to severe domestic depressions. He introduces the concept of 'defensive tariffs' (Defensivzölle) as a legitimate response to foreign protectionism, provided they are limited to offsetting the productivity loss caused by foreign trade barriers, thereby maintaining a more optimal allocation of domestic resources than forced autarky. [The Theory and Limits of Defensive Tariffs]: This section provides a technical justification for defensive tariffs. Mahr argues that if foreign tariffs reduce export earnings by a certain percentage, the nation's overall productivity effectively drops because more domestic resources are required to obtain the same volume of imports. In such cases, a domestic tariff that encourages import substitution is not a misallocation of resources but a rational adjustment to the altered international price structure. He defines the theoretical limit of a defensive tariff as the point where it merely compensates for the productivity loss induced by foreign measures without becoming an aggressive, welfare-reducing barrier. [Kapitel 60: Argumente für Außenhandelsbeschränkungen]: Mahr evaluates various arguments for trade restrictions beyond simple defensive measures. He discusses Friedrich List's 'infant industry' (Erziehungszölle) argument, noting its historical relevance for developing nations but questioning its applicability to modern industrialized states. He critiques Schüller's cost-difference theory using Haberler's counter-arguments regarding resource displacement. A significant portion is dedicated to 'dumping'—monopolistic, state-subsidized, and currency-based—concluding that while anti-dumping duties are theoretically justified as emergency measures, they would be largely unnecessary under a regime of mutual free trade. He suggests that temporary domestic distress caused by foreign innovation is better addressed through time-limited subsidies rather than permanent tariffs. [Modern Protectionism: Full Employment and Quantitative Restrictions]: The final section addresses modern justifications for protectionism, specifically the 'full employment' argument and the use of the foreign trade multiplier. Mahr explains how a country pursuing expansionary policy during a global depression may face a balance of payments crisis, tempting it to use import quotas or exchange controls to protect domestic employment. He warns of the 'beggar-my-neighbor' cycle (citing Joan Robinson) where mutual restrictions lead to a cumulative collapse of world trade. He also touches upon non-economic goals like national defense and cultural preservation. He concludes that while protectionism may offer short-term relief from 'imported' unemployment, a return to liberal trade policies by leading nations is the only path to long-term global prosperity. [The Conjunctural Effects of Mutual Trade Liberalization]: This chapter analyzes the effects of mutual trade liberalization on economic cycles and employment. Mahr argues that while individual tariff reductions can be harmful, mutual liberalization often leads to a significant economic upswing, as seen in the post-WWII OEEC experience. He explains this through the 'integration accelerator,' where increased demand in export industries triggers substantial new investments that outweigh the decline in protected domestic sectors. He emphasizes that the success of integration depends on available capacity in investment goods industries and the ability of firms to specialize rather than collapse under competition. [Bibliography (Literatur)]: A comprehensive list of academic literature cited in the work, covering international trade, exchange rates, customs unions, and general economic theory. Includes major works by authors such as Haberler, Keynes, Meade, Ohlin, Ricardo, and Viner. [Appendix: On the Methodology of Economics]: An appendix discussing the various research methods in economics. It contrasts the historical-causal method with the mathematical school (Walras, Pareto) and modern econometrics. Mahr critiques the view that only quantified economics is 'exact,' arguing that qualitative and psychological factors are essential. He advocates for a division of labor between qualitative causal theory and mathematical econometrics to advance the field without over-relying on complex analysis for general instruction. [Name Index (Namenverzeichnis)]: An alphabetical index of authors and thinkers mentioned throughout the book, ranging from Abbott to Zwiedineck-Südenhorst, with corresponding page numbers. [Subject Index (Sachverzeichnis)]: A detailed subject index providing page references for key economic concepts, theories, and terminology discussed in the volume, from 'Abgeleitete Einkommen' (derived income) to 'zyklischer Budgetausgleich' (cyclical budget balancing).