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.
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Book III, Chapter IV

The Use of Capital According to the Say-Hermann School


Among the writers of the Say-Hermann school there obtains no exact agreement in the description and definition of the Use. But this want of agreement appears to me traceable, not so much to any real difference of opinion about the subject, as to their common failure to give any clear account of its nature. They hesitate in their definitions, not because they have different objects in view, but because, of the one object that all have in view, they have only uncertain vision. One proof of this lies in the fact that the individual Use theorists get into contradiction with their own definitions almost as often as with those of their colleagues. In this chapter we shall gather together provisionally the more important readings of the conception.


Say speaks of the "productive services" of capital, and defines them as a "labour" which capital performs.


Hermann in one place (p. 109) defines the Nutzung of goods as their Gebrauch. He repeats this on p. 111, where he says that the Gebrauch of goods of perishable material may be thought of as a good in itself, as a Nutzung. If Gebrauch here is simply identified with Nutzung, this is not the case in a passage on p. 125, where Hermann says that the Gebrauch is the employment of the Nutzung. On p. 287, finally he explains "the holding together of the technical elements of the product" as the "service," the "objective Nutzung" of floating capital.


Knies also identifies Gebrauch and Nutzung.*53


Schäffle in one place defines Nutzung as the "employment" of goods (Gesell. System, iii. p. 143); similarly on p. 266 as "acquisitive employment." On p. 267 he calls it "the working of an economical subject by means of wealth, a using of wealth towards fruitful production." On the same page it is called a "devotion" of wealth to production; with which it is a little inconsistent that, on the next page, he speaks of a devotion of the Nutzung of capital—that is, of the devotion of a devotion. In the Bau und Leben, finally, Schäffle explains the uses in one place (iii. p. 258) as "functions of goods"; somewhat later (p. 259) as "equivalents of useful materials in living labour"; while on p. 260 the Nutzung is defined as the "releasing of the utility (Nutzen) from material goods."


If we look more closely at this somewhat chequered array of definitions and explications we may see in them two interpretations of the conception of use, a subjective and an objective. These two interpretations correspond pretty exactly with the double sense in which the word Use or Nutzung is generally employed in ordinary speech. It indicates, on the one hand, the subjective activity of the one who uses, and is called in German indifferently Benutzung or Gebrauch in the subjective sense of that equally ambiguous word; or, more significantly, Gebrauchshandlung. And, on the other hand, it indicates an objective function of the goods that are used; a service issuing from the goods. The subjective interpretation appears vaguely in Hermann's identification of Nutzung and Gebrauch, and very strongly in Schäffle's earlier work. The objective interpretation distinctly predominates with Say; almost as distinctly with Hermann, who, indeed, in one place speaks explicitly of the "objective use" of capital; and even Schäffle inclines to it in his latest work when he speaks of the use as a "function of goods."


It is easy to see that of the two interpretations it is simply and solely the objective that accords with the character of the Use theory. For, taking it only on the most obvious grounds, it is absolutely impossible to give a subjective meaning to those uses of capital which the borrower buys from the lender, and pays with loan interest. These cannot be acts of use performed by the lender, for he does not perform any such. Nor can they be acts of use performed by the borrower, for, although he may intend to perform such actions, he does not of course require to buy his own actions from the lender. To speak, therefore, of a transference of the uses of capital in the loan, has a meaning only if we understand by the word "uses" objective elements of use of some kind or other. I think, then, that I am justified in leaving out of account, as inconsistencies that contradict the spirit of their own theory, those subjective interpretations of use that are to be found sporadically in individual Use theorists, and in confining myself exclusively to the objective interpretations which have been adopted by the majority, and which, since Schäffle's change of front, are the only recognised interpretations. By Use, then, in the sense given it by the Say-Hermann school, we have to think of an objective useful element which proceeds from goods, and acquires independent economical existence as well as independent economical value.


Now nothing can be more certain than that there are, in fact, certain objective useful services of goods that obtain economical independence, and may, not unfitly, be designated by the name of Uses (Nutzungen). I have already, in another place, treated of these in detail, and done my utmost to describe their true nature as exactly and thoroughly as possible.*54 Singularly enough, this attempt of mine stands almost alone in economic literature. I say "singularly enough" deliberately, for it does seem to me a very wonderful thing that, in a science which from beginning to end turns, as on its axis, on the satisfying of needs by means of goods,—on the relation of use between men and goods,—no inquiry has ever been made into the technical character of the use of goods. Or that, in a science where pages, chapters, even monographs have been written on many another conception, not a couple of lines should have been devoted to the definition or explanation of the fundamental conception "use of a good," and that the expression should be dragged into every theoretical research in all the confusion and ambiguity which it has in ordinary life.


Since for our present purpose everything depends on us getting a reliable idea of the useful functions which goods serve, I must at this point go into the matter with some exactitude; only begging the reader not to look on what follows as a digression, but as strictly germane to the subject.*55

Notes for this chapter

Geld, p. 61: "Nutzung = the Gebrauch of a good lasting over a period of time, and limitable by moments of time."
See my Rechte und Verhältnisse vom Standpunkte der volkwirthschaftlichen Güterlehre, Innsbruck, 1881, p. 51.
I take the liberty in the next chapter of repeating, partly in the same words, the argument of my Rechte und Verhältnisse, which was written some time ago with a view to the present work.

End of Notes

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