Capital and Interest

Ludwig von Mises

The publication of a new Eng­lish-language translation of Böhm­-Bawerk’s monumental work on Capital and Interest’ raises an important question. There is no doubt that Böhm-Bawerk’s book is the most eminent contribution to modern economic theory. For every economist it is a must to study it most carefully and to scrutinize its content with the ut­most care. A man not perfectly familiar with all the ideas ad­vanced in these three volumes has no claim whatever to the appella­tion of an economist. But what about the general reader, the man who does not plan to specialize in economics because his strenuous involvement in his business or in his profession does not leave him the leisure to plunge into detailed economic analysis? What does this book mean to him?

To answer this question we have to take into account the role that economic problems play in present-day politics. All the polit­ical antagonisms and conflicts of our age turn on economic issues.

It has not always been so. In the sixteenth and seventeenth centu­ries the controversies that split the peoples of Western civilization into feuding parties were reli­gious. Protestantism stood against Catholicism, and within the Prot­estant camp various interpreta­tions of the Gospels begot discord. In the eighteenth century and in a great part of the nineteenth cen­tury constitutional conflicts pre­vailed in politics. The principles of royal absolutism and oligarchic government were resisted by lib­eralism (in the classical Euro­pean meaning of the term) that advocated representative govern­ment. In those days a man who wanted to take an active part in the great issues of his age had to study seriously the matter of these controversies. The sermons and the books of the theologians of the age of the Reformation were not reserved to esoteric circles of spe­cialists. They were eagerly ab­sorbed by the whole educated pub­lic. Later the writings of the fore­most advocates of freedom were read by all those who were not fully engrossed in the petty af­fairs of their daily routine. Only boors neglected to inform them­selves about the great problems that agitated the minds of their contemporaries.

In our age the conflict between economic freedom as represented in the market economy and totali­tarian government omnipotence as realized by socialism is the para­mount matter. All political con­troversies refer to these economic problems. Only the study of eco­nomics can tell a man what all these conflicts mean. Nothing can be known about such matters as inflation, economic crises, unem­ployment, unionism, protection­ism, taxation, economic controls, and all similar issues, that does not involve and presuppose eco­nomic analysis. All the arguments advanced in favor of or against the market economy and its opposites, interventionism or socialism (com­munism), are of an economic char­acter. A man who talks about these problems without having acquaint­ed himself with the fundamental ideas of economic theory is simply a babbler who parrot-like repeats what he has picked up incidentally from other fellows who are not better informed than he himself. A citizen who casts his ballot with­out having to the best of his abili­ties studied as much economics as he can fails in his civic duties. He neglects using in the appropriate way the power that his citizen­ship has conferred upon him in giving him the right to vote.

Fundamental Political Issues Interpreted

Now there is no better method to introduce a man to economic problems than that provided by the books of the great economists. And certainly Böhm-Bawerk is one of the greatest of them. His volu­minous treatise is the royal road to an understanding of the funda­mental political issues of our age. The general reader should start with the second volume in which Böhm analyzes the essence of sav­ing and capital accumulation and the role capital goods play in the process of production. Especially important is the third book of this second volume; it deals with the determination of value and prices. Only then should the reader turn to the first volume that gives a critical history of all the doctrines advanced on the source of interest and profit by earlier authors. In this historical review the most im­portant part is the chapter that analyzes the so-called exploitation-doctrines, first of all the doctrine that Karl Marx developed in his Das Kapital, the Koran of all Marxians. The refutation of Marx’s labor theory of value is perhaps the most interesting, at any rate the politically most mo­mentous chapter of Böhm’s con­tribution.

The third volume consists of fourteen brilliant essays in which Böhm-Bawerk deals with various objections raised against the valid­ity of his theory.

The new translation was made by Professor Hans Sennholz, the chairman of the department of economics at Grove City College, and by Mr. George D. Huncke. Mr. Frederick Nymeyer is to be cred­ited with the initiative to make the whole work of Böhm-Bawerk accessible to the English-reading public. The hitherto only available translation is obsolete as it was made from the first edition of the treatise which consisted only of two volumes. The new translation gives the full text of the revised and considerably enlarged third edition which Böhm-Bawerk com­pleted a few weeks before his pre­mature death in 1914.

A book of the size and the pro­fundity of Capital and Interest is not easy reading. But the effort bestowed upon it pays very well. It will stimulate the reader to look upon political problems not from the point of view of the superficial slogans resorted to in electoral campaigns but with full awareness of their meaning and their conse­quences for the survival of our civilization.

Although Böhm-Bawerk’s great opus is "mere theory" and ab­stains from any practical applica­tion, it is the most powerful in­tellectual weapon in the great struggle of the Western way of life against the destructionism of Soviet barbarism.        



Capital Depletion

Today the federal government goes into the red at a rate of 10 to 15 billion dollars and covers all or part of this deficit with new money…. What are the inevitable effects of such federal gov­ernment deficits and inflationary methods of government financ­ing? The most important although least perceptible effect is the loss and consumption of capital.

HANS F. SENNHOLZ, Inflation Ahead

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