Eugen von Böhm-Bawerk: Review of Robert Meyer’s Das Wesen des Einkommens (1890)

Böhm-Bawerk’s review of Robert Meyer’s 1887 book turns a dispute over the definition of income into a diagnosis of unresolved economic theory. Its movement is threefold: appreciation of Meyer’s criticism of received definitions, scrutiny of his alternative, and a methodological conclusion that conceptual precision depends on understanding substantive economic relations.

Meyer’s achievement is to expose contradictions within the prevailing Hermann–Schmoller definition: income comprises the means an individual can use during an economic period without diminishing wealth. This apparently coherent formula accommodates incompatible criteria—production net of material costs, goods available for consumption, and regularly recurring receipts. Böhm-Bawerk endorses Meyer’s challenge to their presumed equivalence:

Die Nationalökonomen deuten in ihn eine Reihe von Eigenschaften und Merkmalen als vermeintlich selbstverständlich in ihm liegende hinein, die thatsächlich miteinander unvereinbar sind.

English translation: The economists read into it a series of properties and characteristics as though these were self-evidently contained within it, properties which in fact are mutually incompatible.

The difficulty extends to the relation between individual and national income: whether the latter equals the sum of the former, and how that sum should be calculated. Meyer earns strong praise for making these conflicts visible, although Böhm-Bawerk would prefer a clearer arrangement of his critical survey.

The review then turns Meyer’s critical skepticism against his own solution. Approaching Rodbertus, Meyer defines income through an inflow of consumption goods whose recurrence according to need is assured. Böhm-Bawerk tests this definition through concrete cases. A salary of 2,000 florins would yield only 500 florins of income if the remaining 1,500 were capitalized; day laborers’ earnings would fail to count because their recurrence is insecure. Excluding the uses of goods produces a further anomaly: an official receiving 1,000 florins and free accommodation would have less income than one receiving the same salary plus 300 florins to rent precisely that accommodation. Services, meanwhile, enter national income but not individual income. These consequences reveal a divergence between Meyer’s category and the object it is meant to explain:

Aber einem Eindruck können wir uns nicht entziehen: was Meyer Einkommen nennt, ist nicht derselbe Gegenstand, den man im Leben unter Einkommen versteht, und wohl auch nicht derselbe, um den sich die Probleme der Einkommenstheorie bewegen.

English translation: But one impression we cannot escape: what Meyer calls income is not the same object that is understood by income in practical life, and probably not the same one either about which the problems of the theory of income revolve.

The objection is not that Meyer’s reflections lack depth or fruitful applications. It is that definitional ingenuity cannot by itself establish the relevant economic object. Böhm-Bawerk locates the instability of the income concept in uncertainty about the substantive problems attached to it. His analogy is capital: confusion over its definition reflects confusion about productivity and the origin of interest. The status of the uses of goods within income likewise remains unsettled because their role in the emergence and distribution of goods is disputed.

Wo man die Zusammenhänge der Erscheinungen klar durchblickt, da ordnen sich auch die Begriffe leicht — und umgekehrt.

English translation: Where one clearly sees through the connections among the phenomena, there the concepts too arrange themselves easily — and conversely.

This methodological claim gives the short review its wider relevance. Definitions are not isolated verbal settlements; they depend on an account of economic relationships. Böhm-Bawerk therefore ends without supplying a replacement definition or simply blaming earlier theorists and Meyer for their inadequacies. The priority is further work on income theory’s unresolved substantive questions. Meyer’s contribution remains valuable precisely because its critical force can stimulate that work:

Meyers ernste und gründliche Arbeit wollen wir aber unterdessen gerne als ein Ferment für die hier zu erstrebende wissenschaftliche Bewegung gelten lassen.

English translation: In the meantime, however, we are glad to let Meyer's earnest and thorough work stand as a ferment for the scientific movement to be striven for here.