Die Positive Theorie des Kapitals und ihre Kritiker. II. General Walker gegen Kapital und Kapitalzins

Böhm-Bawerk’s article is a tightly organized rejoinder to General Francis A. Walker’s attack on Kapital und Kapitalzins and the Positive Theorie. Its four questions are historical criticism, capital as a factor of production, the explanation of interest, and the relation between production and value. The tone is polemical but methodical: Böhm-Bawerk presents Walker less as a mere opponent than as a revealing case of how productivity theories evade the precise problem of interest.

General Walker mißbilligt den Geist, in welchem meine Kritik der älteren Zinstheorien gehalten war.

English translation: General Walker disapproves of the spirit in which my critique of the older theories of interest was conducted.

The opening defense concerns intellectual history. Walker accuses Böhm-Bawerk of unfairly multiplying old theories and misreading earlier writers. Böhm-Bawerk replies that Walker flattens real doctrinal differences by treating nearly every precursor as a “motivated productivity” theorist. Against that simplification, he insists that abstinence theories, use theories, naive productivity theories, and more refined productivity doctrines must be kept analytically distinct.

Zum Glück hat General Walker die Punkte etwas genauer bezeichnet, auf die er seine Anklage stützt, und sie sind, wie ich glaube, nicht so beschaffen, daß ich Ursache hätte, das Urteil der Leser zu scheuen.

English translation: Fortunately, General Walker has indicated somewhat more precisely the points on which he bases his accusation, and they are, I believe, not of such a nature that I should have reason to fear the readers' judgment.

This dispute becomes concrete in the discussion of Lauderdale and the abstinence tradition. Böhm-Bawerk does not deny that earlier authors noticed machines, tools, or capital goods yielding more product than their own cost. His objection is that noticing such a surplus is not yet explaining interest. The decisive question is why competition does not eliminate the excess by raising the value of the productive instrument or lowering the value of the product. Walker’s historical criticism therefore misses Böhm-Bawerk’s target: the older theories identify conditions under which surplus appears, but do not explain its persistent price form as interest.

Und die berühmte und weit verbreitete Abstinenztheorie ist ebenfalls nur eine Erfindung meiner kritischen Phantasie.

English translation: And the famous and widely disseminated abstinence theory is likewise only an invention of my critical fancy.

The second issue is whether capital should be treated as an independent factor of production alongside land and labor. Walker regards this as secondary to the theory of interest; Böhm-Bawerk answers that the classification is essential because productivity theories rely on capital’s supposed elementary productive power. Capital is not denied productive importance, but it is derivative: economically, it consists in produced means of production, and its role must be explained through the time structure of production rather than as an original source of value.

General Walker greift aber noch einen speziellen Fall besonders heraus, um an ihm, als einem Musterbeispiel, meine tadelnswerte Art, historische Kritik zu üben, zu illustrieren.

English translation: General Walker further singles out one particular case, in order to illustrate by it, as a model example, my reprehensible manner of exercising historical criticism.

The center of the article is Böhm-Bawerk’s correction of Walker’s account of his interest theory. Walker portrays him as grounding interest mainly in a psychological underestimation of the future. Böhm-Bawerk replies that this is a serious distortion. His theory depends on the lower present valuation of future goods, which may arise from different causes: present wants may be more urgent than future wants, roundabout methods of production may be more fruitful, and people may sometimes psychologically undervalue future satisfactions. The productivity of roundabout production is therefore not excluded; it is incorporated into an intertemporal theory of valuation.

This distinction lets Böhm-Bawerk reformulate the interest problem. Productivity explains why longer or more capitalistic methods can yield a greater physical product, but it does not by itself explain why the value of that future product exceeds the present value of the means used to obtain it. Interest arises because present goods command a premium over future goods. Capital goods are economically “future goods” in an immature form, and their price is governed by that discount.

The final section turns to value. Böhm-Bawerk rejects the claim that capital literally creates value, while accepting that production affects supply and therefore value. Walker’s productivity formula is too broad: it names scarcity and productive usefulness, but not the mechanism that converts them into interest. The essay’s importance lies in this clarification. Böhm-Bawerk is not denying productivity, cost, scarcity, or the technical superiority of capitalistic production; he is denying that any of these can explain interest without a theory of the valuation difference between present and future goods.