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- Starting from Menger’s work, Böhm-Bawerk developed a theory of the origin and determination of the rate of interest and the period of turnover of capital occurring with the attainment of the market clearing wage. This became the basis of the Austrian school’s theory of capital.
www.britannica.com › money › Eugen-von-Bohm-BawerkEugen von Böhm-Bawerk | Neo-Ricardianism, Capital Theory ...
His theories of interest and capital were catalysts in the development of economics, but today his original work receives little attention. Böhm-Bawerk gave three reasons why interest rates are positive. First, people’s marginal utility of income will fall over time because they expect higher income in the future.
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Starting from Menger’s work, Böhm-Bawerk developed a theory of the origin and determination of the rate of interest and the period of turnover of capital occurring with the attainment of the market clearing wage. This became the basis of the Austrian school’s theory of capital.
Böhm-Bawerk's Positive Theorie des Kapitals (Universitätsverlag Wagner, 1889) (translated by William Smart as Positive Theory of Capital (1892)), offered as the second volume of Capital and Interest, elaborated on the economy's time-consuming production processes and the interest payments they entail.
Feb 5, 2018 · Dr. Böhm-Bawerk’s theory of Interest, then, is an expansion of an idea thrown out by Jevons but not applied. “The single and all-important function of capital,” said Jevons, “is to enable the labourer to await the result of any long-lasting work—to put an interval between the beginning and the end of an enterprise.”
which he expressed his own Positive Theory of Capital, was at the center of controversy from the very beginning, a controversy which was revived in the 1920s and 1930s, and again in the 1970s.
In the Abstinence theory, which makes interest a compensation, made to the owner of capital, for his renunciation of immediate consumption, Böhm-Bawerk sees a confusion of the origin and accumulation of capital with the source and cause of interest.
Böhm-Bawerk's Positive Theory of Capital (1889), offered as the second volume of Capital and Interest, contains his most substantial and profound contribution to our understanding of the economy's time-consuming production processes and of the interest payments they entail. But this volume offers much more.
