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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In so doing he would either sell the same article twice, or he would sell something which did not exist. Here the modern conditions of industry favour the capitalist. Amazon Advertising Find, attract, and engage customers. In the one case the capitalist is paid because the capital he lends produces, bonm helps to produce, new wealth; in the other he is paid because he abstains from diminishing wealth already produced.

This is rendered more plausible by the fact that most loans of capital cpital made in money; we unconsciously assume the gold or notes we receive to be the same gold or notes we lent. Therefore the use of capltal goods for which the lender is paid interest is the use of another person’s goods, and from that the lender cannot draw a profit without injustice. But now a step farther in this direction was taken, although under protest of the strict calital, by the introduction of two contract clauses.

It may with reason appear questionable if the entire profit realised by an undertaker from a process of production should be put to the account of his capital.

From Wikipedia, the free encyclopedia. This again suggests a very different source of interest, viz. The canon doctrine of interest had to all appearance reached its zenith sometime during the thirteenth century.

Thus profit made from a sleeping partnership was, at least, not forbidden.

This theory, in fact, affords a striking instance of caital our science has revenged itself for our unscientific treatment of it. Whether the existence of interest be attended by results that are useful or harmful to the economical production of a people, has absolutely nothing to do with the question why interest exists; and our knowledge of the source from which interest springs, in itself gives us no ground whatever for deciding whether interest should be retained or abolished.

Sonnenfels is not so silent on the subject as Justi. What this positively amounts to may be summed up thus: Thus Grotius takes a hesitating middle course between the old and the new doctrine.

In compass, inasmuch as all forms and varieties of interest must be explained. It has often been remarked that not only does our knowledge of interesting subjects gradually develop, but also our curiosity regarding these subjects. Step by step it managed to introduce the prohibition into legislation. This income is distinguished by certain notable characteristics.


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Considerations like these show that there is constant danger that an unjustifiable use may be made of interesh in themselves justifiable. This pretext is offered them by time. Thus we fail to recognise that there is in natural interest, as well as in loan interest, the strange element of acquisition of wealth without labour.

It is not to be wondered at, then, that both the ancient world and the Christian Middle Ages were exceedingly unfavourable to usury; for the ancient world, in spite of some few economical flights, had never developed very much of a credit system, and the Middle Ages, after the decay of the Roman culture, found themselves, in industry as in so many other things, thrown back to the circumstances of primitive times. I purposely refrain then from entering on any investigation, or giving any decision as to the problem of undertaker’s profit.

That the writers of old pagan times did not go more deeply into the question admits of a very simple explanation. We must not regard the first immediate spending of the money as its use: Or it may happen that one comes to the theoretical conclusion that interest has its origin in the exploitation of the labourer, made possible by the relations of competition between labour and capital; and on that account he may, without more ado, condemn the institution of interest, and advocate its abolition.

The expression gross interest covers a great many heterogeneous kinds of revenue, which only outwardly form a whole. The interest bearing loan accordingly stands to the loan which caapital no interest in exactly gawerk same relation as the Locatio to the Commodatum, and is just as legitimate as it. In such circumstances, to write in favour of it was superfluous, to write against it was hopeless; and it is a most significant indication bwwerk this state of matters that almost the only quarter in which interest was still censured—and that in a resigned kind of way—was in the works of the philosophical writers.

The owner of capital, however, frequently prefers to give up the bohk of obtaining this natural interest, and to hand over the interezt use of the capital to another man against a fixed compensation.

In this category A’s gain inherest B’s gain. In the hands of one who employs baweek in production, the utility of his capital appears in the fact that the total product obtained by the assistance of the capital possesses, as a rule, a higher interext than the total cost of the goods expended in the course of production.

If then we accept “dividend” as the equivalent of “interest”” we shall have to wnd that varying rates of interest are obtainable on equal amounts of capital. What follows has less bearing on the history of theory. Not to mention Calvin, who, indeed, had given the Catholic world quite other causes of offence, Molinaeus had much to suffer; he himself was exiled, and his book, carefully and moderately as it was written, was put on the Index. He will let his judgment as to the causes of the phenomenon of interest be guided, to some extent, by iterest of expediency—which is wholly and entirely bad; and he will let his judgment as to the advantages of interest as an institution be, to some extent, directly guided by purely theoretical considerations—which, at least, may be bad.


Capital and Interest – Wikipedia

He tacitly assumes it as a fact requiring no explanation that interest is paid for a loan; and if in one or two short notes vol. Its principles held almost undisputed sway in legislation, temporal capitak well as spiritual. This page was last edited on 31 Julyat All that I have ans to do is to lay down capitxl briefly as possible a useful and certain terminology, on the basis of which we may have a common understanding in the critical and historical part of this work.

Interet consist partly of a number of legislative acts forbidding the capitzl 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.

The reader will find the essence of it in pp. Now it might possibly be the case that both answers point to elements indispensable in the explanation of interest, but a slight consideration will show that the two answers are very different from one another. The explanation of this reproduction is to be found in the work of those who employ the capital, both manual and intellectual workers.

But, of the two, labour is the living factor, and if surplus value does emerge in capitalist production as a regularly recurring phenomenon, it is more likely that it comes from the living agent than from the dead tool.

The owner of wealth who devotes it to this latter purpose deserves ahd compensation for his abstinence from using it in the former, and interest is this compensation. There is, in short, in every country, although varying from country to country, a certain annual return which can be obtained by capital with a minimum of risk, without personal exertion xnd the owner.

It is of course a familiar expression of everyday life that interest is the price paid for the “use of capital,” but most writers seem to have accepted this formula without translating it.

This, however, immediately suggests the question why a public which, as a rule, is not willing to pay more than it can help for anything, should pay prices such as allow of this profit.