Bohm bawerk – capital and interest; a critical history of economical theory (1922)

LIBRARY AT URBANA-CHAMPAIGN BOOKSTACKS CONCLUSION 424 But neither can the second conception be the The facts are against it correct one It is not for the first time in the dis- tribution of goods, but before that, in the formation of value, that a foreign element intrudes itself by the side of labour An oak tree a hundred years old, which during its long growth has only required the attention of a single day's labour, has a hundred times higher value than the chair which another day's made out of a pair of boards In this case the oak trunk, the product of one day's labour, does not at once become a hundred times more valuable than the chair which costs one labour has But day by day, year by year, the growing value day's labour of the oak diverges from the value of the chair And as it is with the value of the oak, so is it with the value of all those products the production of which costs, not only labour, but time Now the same quiet and stubborn working forces as, step by step, separated the value of the oak from that of the chair, that have at the same time produced interest on it is These forces, effective long before goods come to have marked out the future limiting line between wage division, of labour and interest on capital For labour can be paid on no other principle than " like wages for like work." But if the value of goods produced by similar labour becomes dissimilar capital through the action of these forces, the similar level of wages cannot everywhere be maintained and coincide with the dissimilar rise in the value of goods thus favoured that falls It is only the value of in level, and is goods not appropriated by the wages which it determines All goods that are favoured rise above this level in proportion as they have been favoured by the formation of value, and could not be appro- general rate of When then the final priated by the general rate of wages division comes, after all the workers have received like wages work, these favoured goods must of themselves leave something over which the capitalist can and may appropriate They leave this something over, not because at the last moment for like the capitalist, by his sudden snatch at the spoil, artificially forces down the level of wages under the level of the value of goods, but because, long previously, the tendencies of the formation of value had raised the value of those goods which cost labour and time above the value of those other goods which FUNDAMENTALLY A PROBLEM OF VALUE cost only labour producing its result at once which latter labour, as it must be sufficient ; labour of its production, forms at the 425 the value of to satisfy the same time the standard for the general rate of wages So speak the to draw The conclusions which they force us The problem of interest is a problem of facts are clear But the distribution has a previous history, and must be explained by that previous history The sums of wealth not start away from each other on a sudden the diverging lines which they follow were quietly and gradudistribution ; cut out in previous stages of their career Whoever wishes really to understand the distribution, and truly to explain it, must go back to the origin of the quiet but distinct ally grooving of these lines of division, and this will lead him to the sphere of value This is where the principal work is to be done in the explanation of interest Whoever treats the pro- blem as a simple problem tion before he has it as a problem of come of production breaks off his explanaWhoever treats to the principal point distribution, and distribution only, begins it after the principal point is passed It is only the economist who undertakes to clear up those remarkable rises and falls of value, where the explaining way The are surplus value, who can hope, in explain interest in a really scientific rises them, to interest problem in its last resort is a problem of value If we keep this in view we shall easily find the order of merit into which these various* groups of theories fall, and we shall ascertain where runs the upward line of the development Two theories have entirely mistaken the character of the the one forming the counterpart problem; together of the other- they constitute the lowest step in the development These are the Naive Trod activity theory and the socialist Exploitation theory It may seem strange to mention interest same breath How widely the two diverge which they arrive! How much superior the these two in the in the results at adherents of the Exploitation theory consider their arguments How to the naive assumptions of the Productivity theorists ! proudly they proclaim their own advanced critical The association, however, is justified First, the two theories agree in what they not Neither of them touches on the attitude ! CONCLUSION 426 distinctive problem Neither of them wastes words in explaining up by the value of goods, those peculiar waves which are thrown and out of which surplus value conies The Productivity theory with saying, in regard to these waves of value, that they have been produced The Exploitation theory, almost more culpably, does not even notice them for it they not contents itself ; exist; for however the it, facts of the economical world may run contrary, the level of the value of goods agrees simply with the level of the labour expended on them But not only negations, but positive ideas bind these two theories more closely together than could well be believed They are in truth fruit of one and the same bough children of one and the same naive 'assumption that value grows out of ; production like the blade out of the field This assumption lias an important history of its own in economic literature In constantly changing shapes it has, for a hundred and thirty years, ruled our science, and by forcing the explanation of the fundamental phenomenon in a wrong direction has hindered its progress First it appears in the physiocrat doctrine that land creates all surplus of value by its own fruitfulness Adam Smith took the strength away from the assumption Eicardo entirely uprooted it But, first phenomenal form of it had quite disappeared, Say introduced it for a seeond time into the science in a new and extended form Instead of the one productive power of the physiocrats appear three productive powers, which produce values and surplus values exactly in the same way as formerly before the the physiocrats had produced the produit net Under this form the assumption held the science under its ban for ten At length the spell was broken, for the most part through the passionate but praiseworthy criticism of the But still its tough vitality asserted itself socialist theorists long decades Giving up the form, not the substance, it managed to save under a new disguise, and by a strange freak of fortune found its new home in the writings of those who had most itself The value-creating powers opposed it, the Socialists were gone the value-creating power of labour remained, and with it the olcl fatal weakness that, instead of the subtle bitterly ; : syntheses of the formation of value which should be the work and the pride of our science to unravel, there was nothing left RANK OF THE VARIOUS THEORIES but a stout assumption, or, so pass, a still more stout denial So as an assumption would not of the Productivity of capital and are twin systems Thus the naive theory the 'far 427 theory of the socialists emancipated far as the latter aspires but to be a critical theory, well and also obviously a naive doctrine ; good ; It criticises one naive extreme only to fall into an opposite it is really so extreme that is no it is less naive It is nothing else than the long-delayed counterpart of the Naive Productivity theory In comparison with it the remaining theories of interest may take credit to themselves for standing a step higher They seek for the solution of the interest problem on the ground where the solution is really to be found, the ground of value The respective merits of these theories, however, are different Those which seek to explain interest by the external machinery of the theory of costs have to carry a heavy handicap in the assumption that value grows out of producTheir explanation always leaves something over to Just as certain as is the fact that the fundamental explain tion forces which set in motion all economical efforts of men are their interests, egoistic or altruistic, so certain is it that no explanation of the economical phenomena can be satisfactory where the threads of explanation not reach back unbroken fundamental and undoubted forces This is why fail In thinking that they find the principle of value, of that guide and universal intermediate motive of human economical affairs, not in a relation to human welfare, but in a dry fact of the external history of the manufacture of to these the cost theories goods, in the technical conditions of their production, they follow the thread of explanation into a cid-de-sac, from which it is impossible to find a way to the psychological interest- motive to which every satisfactory explanation must go back This condemnation applies to the majority of the interest we have been considering, however different the have been may one in rank stand those theories which Lastly, step higher have quite cut themselves adrift from the old superstition that the value of goods comes from their past instead of from their future These theories know what they wish to explain, and theories individual theories in what direction the explanation is to be sought If they CONCLUSION 428 have, notwithstanding, not discovered the entire truth, it is rather the result of accident ; while their predecessors, cut off from the right way of its seeking by a wall of assumption, and so sought it in vain The higher step of the development is indicated in certain' individual formulations of the Abstinence theory, but principally sought it in a wrong Use direction, and here it is the theory of the my mind, appears highest point of the Menger that till now And not because his positive development \\p solution is the most complete, but because his statement of the in the later theories ; which, to problem is the most complete often the case, the second more difficult On than the may two things, of which, as is perhaps be more important and first the foundation thus laid I shall try to find for the vexed problem a solution which invents nothing and assumes nothing, but simply and truly attempts to deduce the phenomena of the formation of interest from the simplest natural and psychological principles of our science I may just mention the element which seems to me to It is the influence of Time on involve the whole truth human valuation of goods To expand this proposition must be the task of the second and positive part of my work INDEX OF AUTHORS MENTIONED Where reference ALEXIUS a Massalia, Ambrosius, 20 Aquinas, 22, 2:5, is given to several passages the principal ones are indicated by black figures 35, 37 DIKTZEL, H., 260 Aristotle, 16, 17, 48 Dietzel, K., 287 Droz, 107 Diiliring, 324 Augustine, 20 Dumoulin BACON, 24 33, 43 Barbeyrac, 40 Bastiat, 288, 391, 407, 413, 415 Beccaria, 51 Benthnm, 47 Bernhar.li, 96, 205 Resold, 32 Bischof, 400 Bodiuus, 52 15, 23, 40 Bornitz, 32 Boxhorn, 40 (see Molinaeus) EISF.LF.N, 86 Endemann, 15, 18, 20, 21, 24, 25, 26, 27, 30, 32, 37, 41, 59 FOUBONXAIS, 42, 49 Fulda, 86 Funk, 15, 57, 59 Bohmer, Biisch, 317 CAIRNES, 286 Calvin, 28, 64 Camerarius, 32 Canard, 105 Cancrin, 81 Carey, 153, 293 Cato, 16 Cauwes, 130, 304, 406 Chalmers, 102 GAIUS, 255 Galiani, 48, 49, 56, 208, 259 Gamier, G., 105 Gamier, J., 130, 286, 305, 407 Genovesi, 50 George, 65, 413 Gerstner, 300, 406 Glaser, 172 Godwin, 405 Goldschmidt, 254 Graswinckel, 40 Grotius, 33, 34 Guth, 324 Cherbuliez, 286, 305 Child, 44 Chrysostom, 20 Cicero, 16 Concilia, 49 Coiitzen, 41 Cossa, 400 HELD, 318 Hermann, 188, 193, 207, 210, 216, 233, 245, 325, 410 Hodgskin, 270, 318 Hoffmann, 312, 407 Courcelle-Seneuil, 247, 300, 406 Covarruvias, 22 Huhn, 400 Culpepper, 43 Hume, 47, 58, 59, 60 Hufeland, 81 INDEX 430 JAKOB, 85 PETTY, 382 Jevous, 286, 400 Jones, 102 Pierstorff, 9, 71, 91, 137, 151, 275, 399 Plato, 16 Platter, 71, 74 Justi, 41, 58 Plautus, 16, 17 Politz, 81 KLEINWACHTEII, Kloppenburg, Knies, 15, Potliier, 62, 57 130, 132 Proudhon, 130, 321, 325 40 16, Pufendorf, 41 17, 18, 227, 239, 245, 255, 367, 375, 383, 384 Kozak, 328 207, 216, 223, 259, 339, 340, QUESNAY, 62 Kraus, 81 RAU, 86 Read, 153, 300, 406 LACTANTIUS, 20 Laspeyres, 15, 35, 40 Lassalle, 173, 276, 323 Lauderdale, 111, 143, 179, 270, 275 Law, 52, 58 Leibnitz, 41 Leroy-Beaulieu, 131, 141, 399 Locke, 44, 58, 60, 270, 317 Lotz, 83, 316 Ricardo, 87, 150, 202, 269, 271, 275, 297, 312, 316, 320, 321, 339, 353, 354, 376, 386, 408, 426 Riedel, 127, 132, 139, 210 Rizy, 15 Rodbertus, 173, 291, 306, 322, 325, 326, 328, 374, 389, 390 Roesler, 172, 202 Iloscher, 15, 32, 33, 41, 44, 59, 113, 128, 132, 139, 202, 210, 247, 248, 286, 391, 400 Lucder, 81 Luther, 27 Rossi, 130, 286, 397 M'CuLLOCH, 97, 270, 271, 275, 300, 391, 405 M'Leod, 102 Maffei, 48 Malthus, 96, 149, 270, 274, 275, 408 Mangoldt, 205 Mavesius, 40 Mario, 192 Marx, 173, 174, 323, 325, 326, 367 Mataja, 212 Melanchthon, 27 Melon, 52 Monger, 188, 209, 260, 428 Mercier de la Riviere, 62 Mill, James, 270, 271, 275, 297, 300, 320, 405, 406 Mill, John Stuart, 286, 325, 407 Mirabeau, 63, 62 Mithoff, 205 Molinaeus (Dumoulin), 20, 28, 29, 33 37, 58 Molinari, 57, 130, 286, 399 Montesquieu, 52 Murhard, 81 NASSE, 208 Nebenius, 192, 271 Neumann, Noodt, 40 North, 44 15, 35, 41 SALMASIUS, 33, 36, 58, 59, 215, 247, 256, 259 Sartorius, 81 Say, J B., 85, 104, 111, 120, 132, 139, 188, 193, 194, 198, 210, 229, 232, 245, 249, 325, 407 206, 216, 221, 227, 229, 232, 245, 249, 306, 325, 337, 410 Schaffle, Schanz, 43 Schelhvien, 413 Schmalz, 81 Schon, 137 Schulze-Delitzsch, 400 Schiiz, 286, 400 Scialoja, 131, 132 Scrope, 271 Seneca, 16, 17 Senior, 87, 247, 269, 271, 403, 405, 408, 409 302, 325, Seuter, 81 Sismondi, 318 Sivers, 63 Smith, Adam, 70, 86, 87, 90, 91, 102, 124, 127, 269, 271, 312, 320, 325, 339, 376, 426 Smith, Peshiue, 153, 161 Soden, 82, 316 Sonnenfels, 42, 58, 59, 317 Steuart, 46, 58, 59, 317 Storch, 190 Strasburger, 173, 391, 419 316, 318, 431 INDEX TELLEZ, 21, 23 Thunen, 164, 205, 402 408 Torrens, 96, 151, 274, 41b Turgot, 64, 61, 78, 259, 413, WAGNER, 247, 308, 311 Whately, 102 Wirth, 286, 400 Wiskemann, 15, 27 Wollemborg, 150, 287 ULPIAN, 255 VACOXICS Vacnna, Vasco, 48, 50, 51 23 ZABARELLA Zwingli, 27 THE END 24 96 04/" 31731 ns? 13 - UNIVERSITY OF ILLINOIS-URBANA ... produce a certain amount of wealth But when wealth of which machinery may be is put into the active forms of capital takenas instance and type and capital becomes intermediary between man and his... assistance of the capital ; he cannot charge for the sacrifice of his wealth as wealth and for the sacrifice of his wealth as capital The truth is that, in this case, the one sacrifice of labour admits... it was not the capital that was lent, but the use of the To put it in terms of Bastiat's classical illustration James, capital who lends a plane to William, demands at the year's end a new plane