Capital and Interest (German: Kapital und Kapitalzins) is a three-volume work on finance published by Austrian economist Eugen Böhm von Bawerk. Translator’s Preface↩. My only reasons for writing a preface to a work so exhaustive, and in itself so lucid, as Professor Böhm-Bawerk’s Kapital und Kapitalzins. Capital and Interest (LvMI) – Kindle edition by Eugen von Böhm-Bawerk, William Smart. Download it once and read it on your Kindle device, PC, phones or.

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Capital and Interest – Wikipedia

It was almost a misfortune that Adam Smith put its first great treatise in such an attractive form that “the wayfaring men, though fools, might not err therein. It first became the object of question only in the form of Loan interest, and for full two thousand years the nature of loan interest had been discussed and theorised on, before any one thought it necessary to put the other question which first gave the problem of interest its complete and proper range—the question of the why and whence intereet Natural interest.

Both writers agree in their principles, but the way in which they state them differs as widely as do their callings. In the circumstances of the latter—where a perishable or fungible good is transferred—the use consists in one complete consumption; and it might be objected that, in such a case the use of a thing could not be separated from the thing itself. It was inevitable that the recognition of such facts that had for long been commonplaces among practical men, should in the end force its way into literary circles.

I shall only treat that as interest which everybody recognises to be interest—that is to say, the whole of contract interest, 11 and, of the “natural” profit of undertaking only so much as represents the rate of interest usually obtainable for capital employed in undertaking. Whether these exertions were quite as successful as they were zealous may interwst some reason be doubted.

To illustrate marginalism, he gave the following example:. As we read these refutations we begin to understand how Salmasius so brilliantly succeeded where Molinaeus a hundred years before had failed, in convincing his contemporaries.

The fate of the leaders in this movement showed clearly enough that there was cause for fear. He has enough intellectual freedom and apprehension of the needs of economic life to weigh impartially its advantages and disadvantages, and to pronounce interest an economical necessity.

It is the unpaid sacrifice of labour. It is often assumed that, if a labouring man during his week’s work consumes the value of, say 20s. Retrieved from ” https: The fact is that, of the numerous views advanced as to the nature and origin of interest, no single one was able to obtain undivided assent. Of the two phases of the canonist writings on this subject, the first is almost without value for the history of theory.


The fifty shillings interest he pays seems almost an inadequate return for the added productiveness given to his labour over the year.

People were concerned less to investigate the nature of loan interest for its own sake than to find in theory something that would help them to an opinion on the good or evil of interest, and would give that opinion a firm root in religious, moral, or economical grounds. In this abundant literature the first place, both in time and rank, was taken by the celebrated Claudius Salmasius.

In this answer two statements are involved: But what had most influence was an, in the sacred writings of the New Testament, were found certain passages which, as usually interpreted, seemed to contain a direct divine prohibition of the taking of interest.

Economically speaking, as wage is a fair bargain with labour, because labour can produce its own wage, so is interest a fair bargain with bawetk capitalist, because in waiting the capitalist merely puts into bphm the universal estimate made by men between present and future goods, and the capitalist is as blameless of robbery as the labourer. And this investigation could not be one that was content to point out the obvious and striking interets of the phenomenon, but one that would cast light on its more homely forms.

Every good is nothing but the sum of its uses, and the value of a good is the value of all the uses contained in it. This period begins deep in ancient times, and reaches down to the eighteenth century of our era. The more complex formulations of it—where, for instance, emphasis is laid on the displacement of labour by capital, and interest is assumed to be the value formerly obtained as wage, or where prominence is given to the work of natural powers which, though in themselves gratuitous, are made available only in the forms of capitalist production—he has called the Indirect theories.

If you are a seller for this jnterest, would you like to suggest updates capiital seller support? Then, from the ninth chapter onwards, with extraordinary display of force and erudition, with many passages full of striking eloquence, but, it must be said, with endless prolixity, comes the disproof of the argument that interest is “unnatural.

In the one case interest is a payment for a tool; in the other, a recompense for a sacrifice. Caputal by experience of the necessity of loan interest, they began to re-examine the theoretical foundations of the prohibition, and finding that these would not bear investigation, they commenced to write in opposition to the canon doctrine, basing their opposition on principles.


The social and political problem asks whether there should be interest on capital—whether it is just, fair, useful, good,—and whether it should be retained, modified, or abolished.

What labour does is to produce a quantity of commodities, and what capital co-operating with labour usually does is to increase that quantity. The consumption of innterest and of other kinds of lent goods furnished a second “natural right” argument. They will serve to give a more accurate idea of the spirit in which people were accustomed to deal with our problem in the seventeenth century, and far into the cappital, and to make the reader better acquainted with a writer whom nowadays many quote, but few read.


Thus we come back to the old question, What service does capital render that the abstinence which preserves and accumulates it should get a capitwl payment? This has been the case with the phenomenon of interest. This is very gawerk and fully put by Thomas Aquinas. They consist partly of a number of legislative acts forbidding the taking of interest,—some of them reaching back to a very early date, 13 —partly of more or less incidental utterances of philosophic or philosophising writers.

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One of its first results, not marked by much outward circumstance, but actually of great importance, was obtained even when the canon doctrine was still, to all appearance, at the height of its capial. Merchants and practical men were, without exception, steadily on the side of interest. And then he also introduces the effective illustration used by Calvin of the rich man who purchases land with borrowed money. It is the explanation of Net interest with which the theory of interest naturally has to do.

The hostile baeerk of the ancient world are not few in number, but they are of trifling importance as regards development of theory.

In this category A’s gain is B’s gain. The canon doctrine of interest had to all appearance reached its zenith sometime during the thirteenth century.

But the ordinary life of many a peasant proprietor who lives by continual toil, and never “gets out of the bit,”—that is, never does more than reproduce his bare living—might show that the assumption is not universally valid, and that labour by no means always produces more value than it consumes.