Alexander Mahr, “Bemerkungen zur Begriffsbildung in der Kapital- und Zinstheorie” (1967)

This file is a single theoretical essay. Mahr’s purpose is conceptual: to clarify the terms “capital,” “investment,” and “interest” where economic theory has produced ambiguity by treating heterogeneous objects and markets as if they were one.

Kein zweiter Begriff der ökonomischen Theorie ist so verschiedenartig definiert worden wie der des Kapitals.

English translation: No other concept in economic theory has been defined in such diverse ways as that of capital.

Mahr criticizes definitions of capital as produced means of production, income-yielding wealth, or invested money because each misses capital’s double form. Against a merely physical or merely monetary definition, he treats real capital and money capital as two aspects of one phenomenon.

Wieser hat allerdings diesen beiden Formen einen verschiedenen Begriffsumfang gegeben, doch erscheint es richtiger, die Naturalform (Realkapital) und die Geldform (Geldkapital) bloß als zwei Aspekte der gleichen Erscheinung aufzufassen.

English translation: Wieser, to be sure, gave these two forms different conceptual scope, yet it seems more correct to regard the physical form (real capital) and the monetary form (money capital) merely as two aspects of the same phenomenon.

This distinction lets him separate “capital” in the national-economic sense from private wealth that happens to yield income. Consumer loans, secondary purchases of securities, and land purchases may be privately profitable, but they do not necessarily add to social productive capacity.

Mit anderen Worten: nicht jeder Geldbetrag, der vom Eigentümer gewinnbringend verwendet wird, gehört zum volkswirtschaftlichen Kapital.

English translation: In other words: not every sum of money that is put to profitable use by its owner belongs to the capital of the national economy.

Investment is then defined from the money-capital side, but only as it finances future-yielding real capital. Mahr’s key restriction is that private investment and social net investment are not identical: one person’s purchase may be offset by another’s disinvestment, hoarding, or consumption of sale proceeds.

Der Begriff der Investition wird primär stets auf die Geldform des Kapitals bezogen; wir wollen daher unter Investieren die Verwendung von Geldkapital zur Erzielung künftiger Erträge — in der Form von Zinsen, Dividenden, Erträgen aus Fabriken usw. — verstehen.

English translation: The concept of investment is always referred primarily to the monetary form of capital; we shall therefore understand by investing the employment of money capital for the purpose of obtaining future returns—in the form of interest, dividends, earnings from factories, and so on.

The middle of the essay attacks the simplifying fiction of a single capital market and a single interest rate. Mahr distinguishes the short-term money market from the long-term investment market, preferring “Anlagemarkt” to the practical but imprecise “Kapitalmarkt.”

Ein großer Teil der Unklarheiten in der Kapital- und Zinstheorie ist auf den Umstand zurückzuführen, daß der einheitliche Markt, von dem viele Theoretiker ausgehen, in der Wirklichkeit gar nicht gegeben ist.

English translation: A great part of the obscurities in the theory of capital and interest is due to the fact that the unified market from which many theorists proceed does not in reality exist at all.

Persistent interest-rate differences arise from seasonal demand, business cycles, bank liquidity, central-bank policy, institutional constraints, and the different “Einsatzperioden” of working and fixed capital. Entrepreneurs choose loan maturities mainly according to the period for which funds are tied up, not simply according to the cheapest rate. Arbitrage is limited by transaction costs, risk, legal rules, and liquidity danger.

In Wahrheit handelt es sich hier um zwei verschiedene Märkte, die beide ihre Eigengesetzlichkeit aufweisen und zwischen denen nur eine beschränkte Kommunikation stattfindet.

English translation: In truth we are dealing here with two different markets, each of which exhibits its own laws, and between which only limited communication takes place.

The final section turns to interest itself. Interest is tied to invested money capital, but that money may finance wages and subsistence goods as well as machines or factories.

Der Zins ist der Ertrag des investierten Geldkapitals.

English translation: Interest is the yield of invested money capital.

Mahr therefore rejects the view that interest is merely the yield of physical production goods. He also rejects the older account of interest as a reward for saving and finds Keynes’s liquidity-premium theory insufficient. If interest disappeared, savers would not only hoard cash; many would shift into durable consumer assets, homes, art, jewelry, or land. Interest must instead induce funds toward productive investment.

Der Zins ist weder eine Prämie für das Sparen, noch wird er als Illiquiditätsprämie ausreichend charakterisiert. Er ist vielmehr als Investitionsprämie zu bezeichnen.

English translation: Interest is neither a premium for saving, nor is it adequately characterized as a liquidity premium. Rather, it is to be designated as an investment premium.

The essay’s main thesis is that capital theory must distinguish private wealth from social capital, gross asset placement from net capital formation, short-term money markets from long-term investment markets, and liquidity compensation from investment inducement. Its relevance lies in showing how conceptual looseness about “capital” and “the interest rate” generates false theoretical problems. Mahr’s core move is to bind capital to productive future returns while preserving its monetary form, and to define interest as the premium needed to keep savings from flowing into hoards, land, or durable consumption goods rather than into productive capital formation.