''Capital and Interest'' (german: Kapital und Kapitalzins) is a three-volume work on finance published by

Austrian economist The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...

Eugen Böhm von Bawerk Eugen is a masculine given name which may refer to: * Archduke Eugen of Austria (1863–1954), last Habsburg Grandmaster of the Teutonic Order from 1894 to 1923 * Prince Eugen, Duke of Närke (1865–1947), Swedish painter, art collector, and pat ...

(1851–1914). The first two volumes were published in the 1880s when he was teaching at the

University of Innsbruck The University of Innsbruck (german: Leopold-Franzens-Universität Innsbruck; la, Universitas Leopoldino Franciscea) is a public research university in Innsbruck, the capital of the Austrian federal state of Tyrol, founded on October 15, 1669. ...

. The first volume of Capital and Interest, titled ''History and Critique of Interest Theories'' (1884), is an exhaustive survey of the alternative treatments of the phenomenon of

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...

: use theories, productivity theories, abstinence theories, and many more. In this work Böhm-Bawerk built upon the

time preference In economics, time preference (or time discounting, delay discounting, temporal discounting, long-term orientation) is the current relative valuation placed on receiving a good or some cash at an earlier date compared with receiving it at a later ...

ideas of Carl Menger, insisting that there is always a difference in value between present

goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not t ...

and future goods of equal quality, quantity, and form. Furthermore, the value of future goods diminishes as the length of time necessary for their completion increases. Böhm-Bawerk cited three reasons for this difference in value. First of all, in a growing

economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...

, the supply of goods will always be larger in the future than it is in the present. Secondly, people have a tendency to underestimate their future needs due to carelessness and shortsightedness. Finally,

entrepreneur Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...

s would rather initiate production with goods presently available, instead of waiting for future goods and delaying production. Also included was a critique of

Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...

exploitation theory Exploitation of labour (also known as labor) is a concept defined as, in its broadest sense, one agent taking unfair advantage of another agent. It denotes an unjust social relationship based on an asymmetry of power or unequal exchange of value be ...

. Böhm-Bawerk argued that capitalists do not exploit workers; they accommodate workers – by providing them with income well in advance of the revenue from the output they helped to produce. Böhm-Bawerk's ''Positive Theory of Capital'' (1889), offered as the second volume of Capital and Interest, elaborated on the economy's time-consuming production processes and of the interest payments they entail. Book III, Value and Price, built on Menger's Principles to present a distinctly Austrian version of marginalism. To illustrate marginalism, he gave the following example: ''Further Essays on Capital and Interest'' (1921) was started as appendices to the second volume, but appeared as a third volume. All three volumes were recently published together as a bound set by

Libertarian Press Libertarianism (from french: libertaire, "libertarian"; from la, libertas, "freedom") is a political philosophy that upholds liberty as a core value. Libertarians seek to maximize autonomy and political freedom, and minimize the state's enc ...

. Libertarian Press's edition was translated by

Hans Sennholz Hans F. Sennholz (; ; 3 February 1922 – 23 June 2007) was a German-born American Austrian School economist and prolific author who studied under Ludwig von Mises. A Luftwaffe pilot during World War II, he was shot down over North Africa on 31 Au ...

and first published in 1959. The

Ludwig von Mises Institute Ludwig von Mises Institute for Austrian Economics, or Mises Institute, is a libertarian nonprofit think tank headquartered in Auburn, Alabama, United States. It is named after the Austrian School economist Ludwig von Mises (1881–1973). It ...

made available in 2007 the William Smart translations as ''Capital and Interest'', ''Positive Theory of Capital'', and ''Recent Literature on Interest''.

References

External links

''Capital and Interest'' by Eugen von Böhm-Bawerk
{{italic title 1884 non-fiction books 1889 non-fiction books 1921 non-fiction books 1959 non-fiction books Austrian School publications Economics books Finance books Interest 1921 in economics