Böhm-Bawerk’s encyclopedia article is a compact theoretical map of the capital concept. It moves from definition and doctrinal history to classification, productive function, capital formation, and “capitalism.” Its guiding concern is that economists have used one word for two different relations: capital as a private source of income and capital as a social means of production.
Ihre Benennung mit dem gleichen Namen des Kapitals ist die Quelle vieler Verwirrungen geworden.
English translation: Their designation by the same name of capital has become the source of many confusions.
The article therefore separates “Erwerbskapital” from “Produktivkapital.” The first belongs to private economy and distribution: goods, money, or rights that yield income to an owner. The second belongs to social production: produced means of further production, or intermediate goods. This distinction lets Böhm-Bawerk explain why rental houses, loanable money, or claims to income may be private capital without necessarily being productive capital in the technical sense.
The historical section shows how ambiguity entered economic language. “Capital” first meant the principal sum of a loan, then interest-bearing money, and only gradually came to denote stocks of goods used in production. Böhm-Bawerk credits later doctrine, including socialist criticism, with forcing economists to distinguish real productive instruments from the private ownership titles attached to them. Yet he rejects the conclusion that, because productive capital and private capital are conceptually separable, private capital ownership is thereby automatically useless or illegitimate.
His classifications continue this clarification. Productive capital includes produced materials, tools, machines, buildings, improvements, transport works, inventories, and money insofar as it serves exchange. Private capital has a wider extension, since income-yielding consumer goods may also count for the owner. Fixed and circulating capital are then distinguished by their mode of service: repeated use versus exhaustion in a single productive act.
The theoretical center of the article is Böhm-Bawerk’s refusal to treat capital as an original productive force beside nature and labor.
Das Kapital ist keine originäre, selbständige Produktivkraft.
English translation: Capital is not an original, independent productive force.
Capital goods are themselves products of labor and nature. Their importance lies not in independent creative power but in their role as intermediate stages in time-consuming production. Humans often obtain better results by first making tools, machines, cultivated land, mines, or transport systems rather than aiming directly at final consumption. This is the familiar Böhm-Bawerkian theory of roundabout production.
Die kapitalistischen Produktionsumwege lohnen sich erfahrungsgemäß durch größere Ergiebigkeit, ja bilden oftmals den einzigen Weg, der zum beabsichtigten Produktionsziele führt.
English translation: Experience shows that capitalistic roundabout methods of production pay off through greater productivity; indeed, they often constitute the only path leading to the intended goal of production.
Capital is thus “productive” only derivatively. It embodies past productive effort and enables more fruitful future effort, but it is not a mysterious third substance creating value by itself. Capital goods are unfinished consumption goods moving through a temporal chain.
Sie sind nichts Schaffendes, sondern lediglich etwas Geschaffenes.
English translation: They are nothing creative, but merely something created.
The section on formation connects this theory to saving. Böhm-Bawerk rejects the sterile opposition between saying capital is “saved” and saying it is “produced.” Both are true: capital goods must be physically made, but longer production processes require restraint from present consumption so that laborers can be maintained while indirect methods mature.
The final section turns from capital to capitalism. Böhm-Bawerk defines capitalism as an order in which owners of capital direct production, employ labor, own the product, and receive interest or profit. This social form is not logically identical with the technical necessity of capital goods. Still, any non-capitalist alternative must solve the same problems of directing production, maintaining saving, and organizing long production processes. The article’s enduring significance lies in this set of separations: capital from money, productive goods from property titles, technical roundaboutness from social domination, and accumulation from genuine capital formation.
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