Wilhelm Röpke, Review of Kapitalbildung by J. Marschak and W. Lederer (1937)

Wilhelm Röpke’s scholarly book review assesses a study of capital formation whose theoretical and statistical parts were written under the difficulties of exile. His judgment combines sympathy for the circumstances of production with specific economic criticism: the book lacks full coordination and theoretical currency, but offers valuable conceptual clarification and a particularly promising statistical reference work. The review proceeds from the authors’ disrupted collaboration to Marschak’s treatment of capital-market concepts, then closes with a brief, strongly favorable assessment of Lederer’s empirical contribution.

Röpke treats the book’s publication history as relevant to fair criticism. Prepared while both authors still worked in Germany, it appeared only after their academic careers there had ended and they had become geographically separated, one working in England and the other in the United States. Its printing in Germany, publication by an English firm, and support from the Rockefeller Foundation reveal the international arrangements that made completion possible. These circumstances help explain uneven coordination, the implicit connection between the two parts, and the theoretical section’s compressed, difficult style. They do not erase those weaknesses, but qualify how they should be judged.

But once all this has been said one should look at the other side and welcome this book as the happy result of the perseverance and the intellectual keenness of the authors and of the generosity of their sponsors.

This acknowledgment establishes the review’s evaluative balance: shortcomings are named without allowing them to obscure the achievement. Röpke then characterizes Marschak’s first part through a distinction between conceptual organization and causal explanation. Influenced by Böhm-Bawerk, Wicksell, Irving Fisher, Lindahl, and Myrdal, it supplies a systematic terminology for the capital market rather than a causal theory of its operation.

This is a limitation of its scope, not of its usefulness.

For Röpke, clarifying “saving,” “investment,” and “income” is itself important because their usage has become confused. Yet terminological clarification must preserve economically significant distinctions. His principal objection concerns Marschak’s treatment of the necessary equality between saving and investment:

It goes without saying, however, that there are many points inviting discussion, so e.g. his treatment of the question of the necessary equality between savings and investments (p. 32) where the salient point seems to have been missed by identifying savings with the actual supply of liquid means and ignoring savings in the form of idle balances.

The objection turns on saving that remains idle rather than becoming an actual supply of liquid funds. Röpke therefore questions a conceptual identification that leaves out a relevant form of saving. He also cautiously suggests that this discussion may no longer represent Marschak’s latest views, connecting the criticism to the book’s delayed appearance rather than treating it as a definitive account of the author’s position.

The discussion of the supply of capital, especially saving’s sensitivity to interest, prompts Röpke to introduce further dimensions from his own work. He points to income level and income distribution as factors deserving attention and asks whether Marschak might find his concept of the “quality” of saving useful. Its subdivisions, “time-quality” and “quality in use,” distinguish liquidity preference from the use to which saving is put. These suggestions broaden the analysis beyond the quantity of saving and its response to interest; the review raises them as questions rather than developing a separate theory.

Lederer’s statistical part receives less detailed scrutiny, explicitly because the review cannot give it the space it deserves. Röpke praises its care, circumspection, and ingenuity, including its capacity to inspire confidence where the statistical explorations appear bold. His concluding prediction is emphatic:

It seems safe to predict that this part of the book will become an outstanding source of reference.

The review’s significance lies in its combination of contextual fairness and analytical discrimination. Röpke values terminological order without confusing it with causal theory, insists that idle balances matter to the saving–investment problem, and points toward the social determinants and qualitative characteristics of saving. His strongest endorsement concerns the empirical work, while his theoretical reservations remain precise and open to discussion.