Eugen von Böhm-Bawerk, Eine „dynamische“ Theorie des Kapitalzinses. Schlußbemerkungen (1913)

Böhm-Bawerk’s concluding article answers Schumpeter’s defense of his dynamic theory of interest. Its central contention is that interest need not originate in entrepreneurial innovation: time-consuming production can explain interest even under stationary conditions. The argument examines the boundaries of statics, ownership of productive resources, attribution of surpluses, and possibilities of empirical verification.

The opening acknowledges the limits of theoretical controversy:

Es ist ein sehr seltenes Glück, wenn ein Kritiker den von ihm kritisierten Autor zu überzeugen im stande ist.

English translation: It is a very rare good fortune when a critic is in a position to convince the author he has criticized.

Rather than expecting agreement, Böhm-Bawerk seeks to clarify the disputed claims. He attributes part of the disagreement to a mismatch between his objections and Schumpeter’s answers:

Und ferner scheint Schumpeter einige Male die Richtung meiner Einwendungen mißverstanden zu haben — ohne Mißverständnisse gäbe es ja wohl überhaupt um sehr viel weniger Polemiken! — und verteidigt infolge davon etwas anderes als das, was ich angegriffen habe.

English translation: And furthermore Schumpeter seems several times to have misunderstood the direction of my objections — without misunderstandings there would probably be very much less polemic at all! — and in consequence defends something other than what I have attacked.

This concern shapes his treatment of statics. A perfectly repetitive economic circuit may serve as an illuminating ideal type, but its characteristics cannot automatically be attributed to every static producer. A newcomer may lack productive resources even when those resources already exist within the economy. Under private ownership, aggregate availability does not establish individual possession. Böhm-Bawerk therefore questions whether successors to existing producers can simply be assumed to inherit their means. Schumpeter’s acknowledgment of borrowing by static producers undermines the general claim that such producers already possess everything necessary for production.

The same distinction bears on entrepreneurship:

Auch die Mittel, die der Unternehmer braucht, müssen ja natürlich innerhalb der Volkswirtschaft schon bei irgend jemandem vorhanden sein.

English translation: The means which the entrepreneur needs must of course also already be present within the national economy in someone's hands.

For Böhm-Bawerk, the existence of resources somewhere in the economy leaves their distribution and acquisition unexplained. His parallel objection to Schumpeter’s entrepreneurial ideal type concerns its scope: exceptional industrial leaders can illuminate innovation without supplying a definition adequate to all entrepreneurs. This ambiguity has quantitative consequences. If entrepreneurial surpluses originate with only a small minority, their frequency, size, and duration must suffice to explain the much larger observed volume of interest.

The discussion of subsistence stocks distinguishes a factual premise from its theoretical implications. Whether longer production requires previously provided resources is one question; whether their necessity explains interest is another. Böhm-Bawerk welcomes Schumpeter’s acknowledgment of the resource requirement but argues that earlier attacks on stocks blurred these issues. The productive contribution of scarce stocks cannot consistently change merely because they belong to static producers, are already owned by entrepreneurs, or are borrowed by entrepreneurs.

This leads to the central causal dispute. Whether roundabout production can generate interest independently of innovation must be investigated, not excluded by definition. Böhm-Bawerk likewise rejects the suggestion that static agents lack a choice among production methods: a clearly preferable option remains an object of choice. Stationary conduct therefore need not eliminate the economic significance of differences between methods.

The later argument turns to verification. Böhm-Bawerk maintains that facts test theories, not that theoretical reasons establish the facts they purport to explain. Historical evidence, observation, and dividend statistics can constrain an interest theory, although statistics cannot directly register every psychological premise of valuation. He also distinguishes static tendencies within an economy from an economy that is actually static. Schumpeter’s concessions that depressions may be too brief to eliminate interest and that interest can extend into static enterprises narrow the observable differences between their accounts.

Indirect testing consequently becomes important: can entrepreneurial surpluses sustain the observed volume of interest? Uncertainty about pioneers, followers, and imitators makes both the origin and persistence of those surpluses difficult to specify. The conclusion locates the fundamental disagreement in the prospective undervaluation of future goods and, more importantly for Böhm-Bawerk’s quantitative assessment, the independent interest-generating force of roundabout production. His explanation requires neither innovation nor growing stocks. The article insists on separating ideal types, resource ownership, causal attribution, and empirical tests when assessing a dynamic explanation of interest.