Capital and Interest: A Critical History of Economical Theory

Eugen v. Böhm-Bawerk, from the Warren J. Samuels Portrait Collection
Böhm-Bawerk, Eugen v.
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William A. Smart, trans.
First Pub. Date
London: Macmillan and Co.
Pub. Date
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Book III, Chapter III

The Plan of Criticism


All the Use theories rest on the following assumption. Not only does real capital itself possess value, but there is a Use (Nutzung) of capital which exists as an independent economical good, possessing independent value; and this latter value, together with the value of the capital, makes up the value of the product of capital.


Now in opposition to this I maintain:—


1. There is no independent "use of capital," such as is postulated by the Use theorists; there can, therefore, be no independent value of the kind asserted, and the phenomenon of "surplus value" cannot thus be accounted for. The assumption is nothing but the product of a fiction which is in contradiction of actual fact.*52


2. Even if there were a "use of capital" of such a nature as is assumed by the Use theorists, the actual phenomena of interest would not be satisfactorily explained thereby.


The Use theories, therefore, rest on a hypothesis which contradicts actual facts, and is, besides, insufficient to explain the phenomena in question.


In proceeding to prove these two theses, I feel that I stand in a somewhat unfortunate position as regards the former. While the discussion of the second thesis opens up virgin soil, undisturbed as yet by the strife of economists, the first seems to put me in the position of attacking a res judicata,—a case long ago carried up through all courts, and long ago decided conclusively against me. It is, indeed, essentially the same question as was in dispute centuries ago between the canonists and the defenders of loan interest. The canonists maintained: Property in a thing includes all the uses that can be made of it; there can, therefore, be no separate use which stands outside the article and can be transferred in the loan along with it. The defenders of loan interest maintained that there was such an independent use. And Salmasius and his followers managed to support their views with such effectual arguments that the public opinion of the scientific world soon fell in with theirs, and that to-day we have but a smile for the "short-sighted pedantry" of these old canonists.


Now fully conscious that I am laying myself open to the charge of eccentricity, I maintain that the much decried doctrine of the canonists was, all the same, right to this extent;—that the independent use of capital, which was the object of dispute, has no existence in reality. And I trust to succeed in proving that the judgment of the former courts in this literary process, however unanimously given, was in fact wrong.


In the next few chapters, then, I hope to prove my first thesis—that there is no "use of capital" of the kind postulated by the Use theorists.


The first thing we have to do is of course to define the subject of discussion. What then is this Use, this Nutzung, the independent existence of which is maintained by the Use theorists and denied by me?


As to the nature of the Use there is no agreement among the theorists themselves. Menger in particular gives an essentially different reading of the conception from that of his predecessors. In view of this I find it necessary to divide my inquiry into at least two parts, the first of which has to do with the conception given by the Say-Hermann school, while the second will deal with Menger's conception.

Notes for this chapter

To guard against a misunderstanding which I should very much deprecate, let me say in so many words that I have no intention of denying the existence of "uses of capital" in general. What I must deny is the existence of that special something which our theorists point to as the "use" of capital, and which they endow with a variety of attributes that, in my opinion, go against the nature of things. But this is anticipating.

End of Notes

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