Mahr’s article reopens the Austrian problem of productive interest by asking what, exactly, the “time element” contributes to interest theory. He begins from Jevons and Böhm-Bawerk, accepting the central claim that capitalistic production is temporally extended and that present factor payments are oriented toward future product revenues.
Die Bedeutung des Zeitmoments für die Erklärung des Zinsphänomens im Allgemeinen und des Produktivzinses im Besonderen ist bekanntlich bereits von Jevons und dann von Böhm-Bawerk mit allem Nachdruck hervorgehoben und ausführlich dargestellt worden.
English translation: The importance of the time element for the explanation of the interest phenomenon in general, and of productive interest in particular, has, as is well known, already been emphasized with all vigor and set forth in detail by Jevons and then by Böhm-Bawerk.
The essay is therefore not a rejection of Böhm-Bawerk but a reconstruction of him. Against Schumpeter’s denial of interest in a static economy, Mahr argues that a rate of interest once generated by development can persist in equilibrium. Static theory does not explain its historical origin, but it can show why no force removes it once capital supply, technique, and population are unchanged.
Die Statik übernimmt den Zinssatz, der sich am Ende der Entwicklung festgesetzt hat, und behält ihn dauernd bei; es ist kein Grund zu seiner Änderung gegeben, da ja Kapitalangebot, Produktionstechnik und Bevölkerungszahl gleichbleiben.
English translation: Statics takes over the interest rate that has established itself at the end of development and retains it permanently; there is no reason for its alteration, since capital supply, production technique, and population size remain the same.
The mechanism is valuation. The entrepreneur buys or hires present productive services in light of expected future sale proceeds, and these expected proceeds are discounted back to the present. Interest thus enters the imputation of value to productive factors wherever production takes time.
Die Bewertung des künftigen Mengenertrages eines kapitalistischen Produktionsprozesses erfolgt nach dem oben Gesagten in der Gegenwart durch Diskontierung des voraussichtlichen Preiserlöses.
English translation: The valuation of the future quantitative yield of a capitalistic production process takes place, according to what has been said above, in the present through discounting of the anticipated price proceeds.
Mahr’s main criticism concerns Böhm-Bawerk’s “average period of production.” If one counts the whole past history of every capital good used in production, the concept becomes unbounded and misleading. An old mine, machine, or building would make a present process appear longer merely because its origin lies farther in the past. Mahr’s corrective is to distinguish sharply between the production period of a good and the later use period of durable capital goods. Only the technically necessary production time embodied in the portion actually consumed by the present process should enter the calculation.
Die Einbeziehung der Nutzungsperiode der Kapitalgüter in die Berechnung der durchschnittlichen Produktionsperiode scheint mir die hauptsächliche Quelle aller Widersprüche und Ungereimtheiten darzustellen, die diesem Begriff bisher anhafteten.
English translation: The inclusion of the period of use of capital goods in the calculation of the average period of production seems to me to constitute the principal source of all the contradictions and inconsistencies that have hitherto attached to this concept.
This revised concept allows Mahr to preserve the Austrian intuition without accepting a historical regress. Raw materials, auxiliary materials, machinery, buildings, and installations enter the average only according to the services or depreciation they contribute. The production period remains a technical and economic magnitude, not the age of the oldest capital good in use.
From there Mahr challenges the supposed law that capital accumulation necessarily lengthens production. More capital may permit longer roundabout methods, but modern technique may also shorten production through mechanization, standardization, and flow production. Nor is it universally true that longer methods yield diminishing additional returns. Some extensions of production greatly raise output per worker; others do not. What matters for entrepreneurial choice is not physical product alone but net return after wages, capital costs, depreciation, and expected prices.
The article’s final contribution is to connect production time with business decision. Entrepreneurs may expand horizontally by multiplying similar processes, or vertically by adopting more capital-intensive and temporally extended methods. They will usually prefer horizontal expansion while labor and materials remain available on unchanged terms. Longer methods become attractive when wages rise, labor becomes scarce, or technical opportunities make capital deepening profitable. Existing fixed capital also creates inertia, since firms cannot instantly abandon durable equipment when a shorter or longer method becomes preferable.
Mahr’s result is a moderated Austrian theory. Productive interest remains fundamentally tied to time, because present factor values depend on discounted future product values. But the time concept must be carefully bounded: production period is not durability, historical age, or the whole ancestry of capital goods. It is the economically relevant interval embodied in the current process and mediated by entrepreneurial calculation.
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