Ludwig von Mises, “Capital and Interest: Eugen von Böhm-Bawerk and the Discriminating Reader”

This short review-essay, reprinted from The Freeman in 1959, uses the new complete English translation of Eugen von Böhm-Bawerk’s Capital and Interest as an occasion to argue for economics as a civic necessity. Mises is not merely recommending a classic to specialists; he is redefining the “general reader” as someone whose political judgment depends on theoretical literacy.

There is no doubt that Böhm-Bawerk's book is the most eminent contribution to modern economic theory.

The essay’s opening claim establishes Böhm-Bawerk as indispensable for economists, but its real problem is democratic and practical: what should such a demanding theoretical work mean to a reader immersed in ordinary business or professional life? Mises answers by shifting from bibliography to historical diagnosis. Earlier centuries, he says, were organized around theological and constitutional disputes; the modern age is organized around economics.

All the political antagonisms and conflicts of our age turn on economic issues.

This is the essay’s central thesis. Inflation, crises, unemployment, unions, protection, taxation, controls, socialism, and interventionism are not detachable policy topics but expressions of rival economic doctrines. Mises’s sharpest conceptual move is to collapse the distance between economic theory and political responsibility: public opinion without economics becomes imitation rather than judgment.

A man who talks about these problems without having acquainted himself with the fundamental ideas of economic theory is simply a babbler who repeats parrotlike what he has picked up incidentally from other fellows who are not better informed than he himself.

From this premise, Böhm-Bawerk’s treatise becomes more than a monument of Austrian theory. It is a training ground for disciplined citizenship, because it equips readers to see through slogans and identify the consequences of policy. Mises therefore presents the work as the “royal road” into the fundamental conflicts between market society and socialist or interventionist power.

Now there is no better method to introduce a man to economic problems than that provided by the books of the great economists. And certainly Böhm-Bawerk is one of the greatest of them. His voluminous treatise is the royal road to an understanding of the fundamental political issues of our age.

Mises also gives a practical reading order. The general reader should begin with volume II, where Böhm-Bawerk explains saving, capital accumulation, capital goods, value, and prices. Only afterward should the reader turn to volume I, the historical and critical survey of earlier theories of interest and profit. Within that history, Mises singles out the critique of exploitation theories, especially Marx’s labor theory of value, as politically decisive.

The refutation of Marx's labor theory of value is perhaps the most interesting, at any rate the politically most momentous chapter of Böhm's contribution.

The third volume, Mises notes, consists of essays answering objections to Böhm-Bawerk’s theory, completing the work’s movement from positive theory to historical critique and then to defense. He also emphasizes the importance of the new translation by Hans Sennholz and George D. Huncke, made from the enlarged third edition rather than the older two-volume version available in English.

The essay’s relevance lies in its polemical defense of “mere theory.” Mises treats abstract economic reasoning as the condition for serious political understanding, not as an academic luxury. His final turn is characteristic: theory is valuable precisely because practical politics is saturated with bad theory.

Although Böhm-Bawerk's great opus is "mere theory" and abstains from any practical application, theory is the most powerful intellectual weapon in the great struggle of the Western way of life against the destructionism of Soviet barbarism.

In a few pages, Mises transforms a notice of translation into a manifesto for economic education. Böhm-Bawerk matters because capital theory, interest theory, value theory, and the critique of Marxism are, for Mises, the intellectual foundations on which the defense of economic freedom depends.