Eugen von Böhm-Bawerk’s Review of Otto Wittelshöfer (1891)

Eugen von Böhm-Bawerk’s review of Otto Wittelshöfer’s Untersuchungen über das Kapital, seine Natur und Funktion (1890) examines the book’s theoretical foundations and its explanation of capital income. Rather than attempting a comprehensive account of its wide-ranging economics, Böhm-Bawerk selects three governing premises, then assesses their explanatory adequacy. His central objection is that Wittelshöfer substitutes an account of unequal power for a developed theory of value and prices.

The first premise receives explicit approval: capital goods must be distinguished from the property rights attached to them.

Er besteht — mit vollem Recht — auf einer strengen Scheidung zwischen den realen Gütern, die das Kapital ausmachen, und den Rechtsverhältnissen, dem Eigentum daran.

English translation: He insists — entirely rightly — upon a strict separation between the real goods which constitute capital and the legal relations, the ownership of them.

Wittelshöfer calls these objective and subjective capital, respectively; objective capital consists of intermediate or previously worked goods. Böhm-Bawerk places this distinction alongside earlier formulations by Rodbertus and Wagner. His agreement matters because his subsequent criticism does not reject the analytical separation of production from ownership.

The second premise defines a product’s value through its proportional contribution to satisfying the nation’s total needs. On this account, the relevant magnitude is the share of aggregate need satisfied, not the product’s absolute capacity to satisfy needs. The third premise assigns exceptional importance to the parties’ relative power in determining prices. Together, these lead Wittelshöfer toward the exploitation theory associated with Rodbertus and Marx. Entrepreneurs generally pay earlier-stage producers the true value of their products because neither side enjoys a systematic superiority in power. Against wage workers, however, ownership provides leverage: workers surrender their product for a subsistence wage, leaving the difference as entrepreneurial profit. Böhm-Bawerk thus reconstructs the route from property relations to the explanation of capital income before criticizing it.

The review’s second movement evaluates the method behind these conclusions. Böhm-Bawerk credits Wittelshöfer with dialectical skill and penetrating observations, while comparing his weaknesses to those of Lorens von Stein: excessive generalization and speculative reasoning insufficiently anchored in experience. He acknowledges that Wittelshöfer usually seeks empirical support and offers sensible cautions about deduction. The failure, he argues, occurs precisely where the theory most needs detailed validation.

Der Verf. hat sie auch im Detail weder geprüft, noch ausgeführt: er hat überhaupt zwar eine Wertauffassung, aber keine Wertlehre gegeben.

English translation: The author has moreover neither examined nor developed it in detail: on the whole he has given a conception of value, but no theory of value.

This distinction between a conception of value and a theory of value is the review’s conceptual hinge. An ingenious aggregate formula does not yet explain particular valuations or actual prices. Without that explanation, the account of capital and labour lacks the economic mechanism necessary to establish its conclusions.

Die thatsächlichen Preise, und darunter auch der Preis der Waren Kapital und Arbeit, sind das Ergebnis gewisser ökonomischer Ursachen, in deren Wirksamkeit sich allerdings auch der Einfluss der bestehenden Machtverhältnisse mit einmischt.

English translation: Actual prices, and among them the price of the commodities capital and labour, are the result of certain economic causes, into whose operation, to be sure, the influence of the existing relations of power also intrudes.

Böhm-Bawerk therefore admits that power affects prices; he contests its elevation into the decisive explanation. In his formulation, power modifies the operation of economic price determinants within limits rather than replacing them. He also faults Wittelshöfer for leaving unanswered existing objections to Rodbertus’s and Marx’s exploitation theories that apply equally to this variant.

The review closes with qualified respect for the book’s intellectual force and suggestiveness despite disagreement with its principal results. Its significance lies in the standard of explanation Böhm-Bawerk demands: distinguishing goods from ownership is legitimate, and recognizing bargaining power is necessary, but neither dispenses with a theory connecting value, price formation, wages, and capital income.