Eugen von Böhm-Bawerk · 1889
Kapital und Kapitalzins. Zweite Abtheilung: Positive Theorie des Kapitales
About this work
Böhm-Bawerk, Positive Theorie des Kapitales (1889)
Böhm-Bawerk’s constructive sequel to his history of interest theories treats capital, production, value, and interest as one connected problem. The point is not simply that capital increases physical output; that fact alone cannot explain why a surplus of value regularly appears. The book therefore makes interest, rather than capital in the abstract, its organizing question.
Das Schwergewicht derselben liegt in der Theorie des Kapitalzinses.
English translation: Its center of gravity lies in the theory of capital-interest.
The opening books derive capital from production’s temporal form. Human labor does not create matter but redirects natural forces, and production becomes “capitalistic” when it reaches consumption goods through indirect stages. Tools, raw materials, buildings, and unfinished goods are not final enjoyments but intermediate products that make later enjoyments more abundant or better. Hence social capital is neither land, labor, all durable goods, nor a mere fund of value.
Das Kapital aber ist nichts anderes als der Inbegriff der Zwischenprodukte, die auf den einzelnen Etappen des ausholenden Umweges zur Entstehung kommen.
English translation: Capital, however, is nothing other than the totality of the intermediate products that come into existence at the individual stages of the roundabout way of production.
This definition lets Böhm-Bawerk separate social or productive capital from private or acquisition capital. A rental house, workers’ subsistence, or loaned sum may yield income to an owner, yet that private income does not by itself define capital’s social function. The concept must be fixed by production’s technical sequence, not by legal ownership or revenue. Capital is therefore not an elementary factor beside labor and nature, but their produced intermediate embodiment. Saving is necessary because resources must be released from immediate consumption if longer methods are to be undertaken, but saving is not itself a moral title to interest.
Book III turns to value because interest is a value phenomenon. Böhm-Bawerk’s marginal utility theory defines subjective value as the importance of a good for welfare under scarcity. Its magnitude depends on the least important satisfaction still secured by the available supply; this rule extends from consumers’ goods to complementary goods, higher-order goods, and costs.
Der Werth eines Gutes bestimmt sich nach der Größe seines Grenznutzens.
English translation: The value of a good is determined by the magnitude of its marginal utility.
Costs do not independently determine value; they transmit marginal utility through the alternative uses of productive goods. Competitive price is likewise explained by the subjective valuations of buyers and sellers, with the limits set by marginal pairs. This prepares the decisive step: interest is a price phenomenon arising because present and future goods of the same kind and number are not valued equally.
Gegenwärtige Güter sind in aller Regel mehr werth als künftige Güter gleicher Art und Zahl.
English translation: Present goods are, as a rule, worth more than future goods of the same kind and number.
Böhm-Bawerk explains this premium on present goods by three causes. Present wants may be more urgent than future wants; people often underrate future needs through weak imagination, weak will, and uncertainty; and present goods possess technical superiority because they can be employed sooner in longer, more productive roundabout processes. Physical productivity is thus retained, but only as one source of intertemporal valuation. Interest is not the mere product of capital, not payment for a separable “use” of consumable goods, and not essentially a deduction from labor’s product.
The loan displays the principle most clearly: present goods are exchanged for future goods plus an agio. Enterprise profit follows the same logic, since wages, materials, land services, and unfinished products are economically future goods until the completed product matures. Durable goods and land are also valued as discounted streams of future services. Against socialist exploitation theories, Böhm-Bawerk concedes that distress, monopoly, and unequal ownership can produce unjust gains, but he denies that they explain the category of interest. Even a socialist community advancing present subsistence for products completed later would confront the same difference between present and future value.
The final theory of the rate treats the market for present goods as a special case of general price formation. Supply is the social subsistence fund; demand comes from workers, entrepreneurs, consumption borrowers, landowners, and capitalists’ own consumption. Equilibrium depends on the absorption of labor and present goods and on the marginal extension of the production period. Larger funds and thrift tend to lower interest, while more workers, richer technical opportunities, or stronger underestimation of the future tend to raise it. The book’s core synthesis is that capital is embodied roundabout production, and interest is the price of present command over goods in a world where waiting is productive but costly.
Sections
This work was divided into 100 sections when it entered the library's research corpus—an apparatus for search and citation, not necessarily the author's own table of contents. Each title opens its summary.
1Title Pages and Publication Front Matter
2Preface
3Table of Contents and Structural Overview
4Introduction: Capital in Production and Distribution
5Book I, Section I: Human Beings, Nature, and the Basic Relations of Goods Production
6Book I, Section II: The Essence of Capital Begins with Roundabout Production
7The Nature of Capital: Roundabout Production and Intermediate Products
8Historical Emergence of the Capital Concept and the Smithian Split
9Competing Definitions of Capital and the Terminological Nature of the Dispute
10Böhm-Bawerk's Preferred Definition of Capital and Critique of Alternatives
11Critique of Knies’s Future-Oriented Definition of Capital
12Land, Narrow Definitions, Abstract Capital, and the Preferred Definition
13Social and Private Capital: Conceptual Relation and Critique of Rodbertus and Wagner
14Components of Social and Private Capital
15Rejection of Labor and Human Powers as Capital
16Book II Opening: Capital as an Instrument of Production
17Book II Methodological Transition and Opening of the Capitalist Production Process
18Elementary Productive Forces: Nature, Labor, and Land Services
19Direct and Indirect Production, Capital Goods, and the Time Cost of Detours
20Degrees of Capitalism, Longer Production Detours, and Diminishing Technical Returns
21Measuring the Production Period and Summarizing the Capitalist Production Process
22Capital as Symptom, Tool, and Enabler of Further Production Detours
23Against Capital as an Independent Third Productive Factor
24Opening of the Theory of Capital Formation: Saving, Production, and Robinson Crusoe
25Robinson Example: Saving Productive Forces and Maintaining Capital
26National Capital Structure, Maturity Classes, and the Stationary State
27Forms of Saving Required for National Capital Accumulation
28Capital Formation under Socialism and Individualist Price Coordination
29Critical Defense of Saving as a Condition of Capital Formation
30The Two Concepts of Value: Subjective Value and Objective Exchange Value
31Origin of Subjective Value: Utility versus Indispensability
32End of Subjective Value: Utility, Scarcity, and Economic Goods
33Opening of the Theory of Value Magnitude and the Diamond-Water Paradox
34Concrete Needs versus Need Classes in Valuation
35Divisible Needs, Satiation, and the Scale of Marginal Importance
36The Dependent Need and the Law of Marginal Utility
37Colonist Example, Quantity and Value, and the Resolution of the Water-Diamond Paradox
38Substitution, Exchange, and Complex Marginal-Utility Valuation
39Need and Provision as Determinants of Marginal Utility; Critique of Acquisition Difficulty
40Section IV Introduction: Multiple Uses, Use Value, and Subjective Exchange Value
41Use Value and Subjective Exchange Value Continued
42Complementary Goods Introduced
43Footnote on Diehl and the Traditional Use and Exchange Value Distinction
44Complementary Goods, Substitution, and Distribution
45Productive Goods, Higher Orders, and the Derivative Nature of Costs
46The Cost Law as a Special Case of Marginal Utility
47The Basic Law of Price Formation Begins
48Preliminary Exchange Motive and Exchangeability
49Isolated Exchange and the Bargaining Range
50One-Sided Competition Among Buyers
51One-Sided Competition Among Sellers
52Bilateral Competition: Market Example and Price Range
53Marginal Pairs and Subjective Valuation as the Price Law
54Supply and Demand Equilibrium and Special Cases
55Individual Determinants of Price
56The Cost Law: Opening, Prior Footnote Continuation, and Standard Formulation
57Consumer Valuations, Iron Prices, and the Price of Cost Goods
58Production Adjustment, Cost-Price Convergence, and the Causality Objection
59Original Productive Forces, Labor, and the Pump Mechanism of Demand
60Productivity Changes and the Cost Law as a Special Form of Marginal Utility
61Ideal Production, Friction, Entrepreneurial Profit, and Time as Source of Interest
62Present Goods and Future Goods: Thesis and Literature of the Time Problem
63First Ground for Higher Present Value: Different Need and Provision Across Time
64First Ground Continued: Durable Present Goods and Reserve Value
65Second and Third Grounds for the Premium on Present Goods
66Market Agio, Time Arbitrage, and the General Discount on Future Goods
67Source of Capital Interest: Section Introduction
68Loan Interest as Exchange and Critique of the Use Theory
69Loan Interest as Price Component and Special Loan Cases
70Entrepreneurial Capital Profit from Higher-Order Goods
71Complications in Capital Profit: Temporal Discounting and Alternative Uses
72Transition from Abstract Discounting to Real Productive Markets
73The Labor Market and Wages Below the Future Product
74Subsistence Advances and the Wealth Stock as Market Supply
75The Subsistence Fund, Staggered Production, and the Average Production Period
76Price Formation, Demand for Advances, and the Necessity of Interest
77Agio as an Economic Brake and Extension to Land, Intermediate Goods, and Socialist Theory
78Labor Purchase, Opportunity Cost, and the Limits of Exploitation
79Durable Goods and Utility Services as Economic Objects
80Valuing Durable Goods as Discounted Sums of Utility Services
81Depreciation and Net Interest from Durable Goods
82Critique of the Use Theory of Interest and Physical Depreciation
83Capitalization and the Circularity of Net-Yield Explanations
84Durable Productive Goods, Working Capital, and Long Service Lives
85Land Rent as a Special Case of Durable-Goods Interest and Opening Results
86Results: Perpetual Interest, Justice, Usury, and Unearned Gain
87Conclusion on Capital Interest, Social Abuse, and Savings Incentives
88Interest in the Socialist State
89The Level of Capital Interest in Isolated Exchange
90The Level of Interest in Market Exchange: Simplest Hypothesis
91Interest Rate Limits from Marginal Production Extensions
92Capital Market with Heterogeneous Labor, Production Periods, and Demanders
93Concrete Determinants of the Interest Rate
94Saving, Wealth, and Intertemporal Allocation of Needs
95Conclusion of the Fully Developed Capital Market
96Appendix I: Size of the Initial Fund Required for a Production Period
97Appendix II: Reply to Robert Meyer on the Critique of Exploitation Theory
98Author Index
99Publisher Advertisements for Related Economic Works
100Facsimile Edition Colophon
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