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Eugen von Böhm-Bawerk, 1851-1914

Austrian economist, statesman, leading member of the Austrian School and creator of the Austrian theory of capital.

Eugen von Böhm-Bawerk (Boehm-Bawerk, sometimes shortened to just Böhm) originated from a prominent family in Brünn (Brno), then part of the Austro-Hungarian province of Moravia. Hs studied at the local schools in Brünn before enrolling at the University of Vienna, where he came under the influence of Carl Menger.   Böhm-Bawerk was in Vienna when Menger published his revolutionary Grundsätze, launching the Marginalist Revolution and the "Austrian School".  It was also at Vienna that Böhm-Bawerk met his comrade, colleague and future brother-in-law, Friedrich von Wieser.

After obtaining his law degree in law from Vienna in 1872, Böhm-Bawerk joined the finance section of the Austrian civil service, while continuing his economic studies on the side, completing his doctorate in 1875. Böhm-Bawerk (along with Wieser) proceeded to study economics further at  universities of Heidelberg, Leipzig and Jena, attending the lectures of Karl Knies, Wilhelm  Roscher and Bruno Hildebrand, the leaders of the German Historical School.

After submitting his habilitation at Vienna in 1880 (pub.1881), Böhm-Bawerk embarked on an academic career, taking up a job as associate (extraordinary) professor at the University of Innsbruck in 1880.  It was during this time that he produced the first two volumes of magnum opus, Capital und Capitalzins.

He resigned his chair in 1889 and returned to the Ministry of Finance in Vienna, where he led a section on tax reform. In 1895, Böhm-Bawerk was appointed Minister of Finance in the Austrian government of Kielmansegge, but held this only briefly. He became minister of finance again from November 1897 to March 1898 (Gautsch cabinet), then a third time from 1900 to 1904 (Körber cabinet).   Although a classical liberal, and associated with the liberal societies, he was not a formal member of any political party.

In 1904, Böhm-Bawerk returned to academia,  succeeding to Menger's chair as professor of political economy at the University of Vienna.  Over the next decade, alongside Wieser, Böhm-Bawerk presided over the education of the next generation of Austrian economists, including Ludwig von Mises, Friedrich von Hayek and Joseph Schumpeter among his students.  Böhm-Bawerk died in 1914.

Eugen von Böhm-Bawerk is best for his three volume work, Capital und Capitalzins, introducing what has become characterized as the Austrian theory of capital.  It was begun largely in response to Karl Marx's challenge to the Classical theory of interest.   Böhm-Bawerk's first volume ("History and Critique", 1884) reviewed various theories of interest, and agreed that interest could not be based on cost (discarding the Senior-Mill theory of abstinence), and posited instead that interest must rest on the superiority of future goods over present goods - what he called the agio. He contemplated various possible reasons for it (including time preference).  This was developed in more detail in his second volume, "Positive Theory of Capital" (1889), where he decided to rest it on the productivity of time.  Picking up from where J.H. Thünen, John Rae and W.S. Jevons left off, Böhm-Bawerk characterized capital as time, a "roundabout" process of investment into labor and land. Crudely put, the more investment (i.e. time) put into building tools and equipment, the greater the resulting output. As roundabout production is more productive than direct simple production, time has a productivity dimension all its own, thus providing the justification for interest. Böhm-Bawerk tried to quantify this by proposing the "Average Period of Production" (APP).

Böhm-Bawerk's work was quickly translated into English by  William T. Smart, and helped introduce the Austrian School (and indeed the Marginalist Revolution) to American economics.  But the theory of capital itself was immediately criticized by John Bates Clark, who had his own competing theory of capital.  This led to a series of polemics in US journals in the 1890s.  The Austrian theory was defended by Thomas N. Carver and Frank A. Fetter.  Frank H. Knight continued the polemics against the Austrian theory of capital through the 1930s.  Irving Fisher would pick up several essential components of it to build his own theory of capital and interest, which was much better received.  Elsewhere, Böhm-Bawerk's theory of capital was picked up, cleaned up and improved by Knut Wicksell in Sweden.

The reception of Böhm-Bawerk's theory of capital by the rest of the Austrian school was lukewarm at first. Friedrich von Wieser distanced himself from it, while his mentor Carl Menger was never enthused by it, and predicted that "the time will come when people will realize that Böhm-Bawerk's theory is one of the greatest errors ever committed." (C. Menger, as quoted by J. Schumpeter, 1954: p.847).  It was given a blistering critique by Emil Sax in 1916.  Nonetheless, it was embraced by Böhm-Bawerk's students, Ludwig von Mises and Friedrich A. von Hayek. Hayek in particular made the theory of capital the centerpiece of his work on business cycles in the 1920s and 1930s.

Böhm-Bawerk also authored a significant 1896 critique of volume III of Karl Marx's Capital, disputing his resolution of the "transformation problem".  

[Clarification on Böhm-Bawerk's editions: the general title was Capital und Capitalzins.  The first volume had specific title Geschichte und Kritik der Capitalstheorien ("History and Critique of Interest Theories") was first published in 1884.  English translator William Smart published it under general title Capital and Interest (1890).  Second volume had specific title  Positive Theorie des Capitals ("Positive Theory of Capital") and was published in 1889, and Smart translated it under specific title Positive Theory of Capital in 1891.  A substantially revised second German edition of the first volume was published in 1900, containing an appendix reviewing the literature published since 1884.  This edition was not translated, but an English translation of its appendices was published in 1903 as Recent Literature on Interest. A revised second German edition of the second volume was published in 1902, this was not translated.  Böhm-Bawerk then began a third edition of the second volume, which appeared in two parts - the first in 1909, the second in 1912.  Each of these parts contained additional new appendices known as the Exkurse ("Essays").  In 1914,  Böhm-Bawerk published a revised third edition of the first volume.  Everything was reorganized in 1921, for a new posthumous German edition, edited by Friedrich von Wieser.  It was now organized into three volumes under the general title of Capital und Capitalzins and referred to as the fourth edition.  The first volume was just the 1914 third edition of the Geschichte und Kritik unchanged.  The second volume was 1909 & 1912 parts of the third edition of the Positive Theorie bound together in one volume.  The third volume collected the additional essays of the 1909 and 1912 parts separately into one volume, with particular title Exkurse zur Positive Theorie des Capitals.  It was only in 1959 that a new English translation of the 1921 German three-volume edition was undertaken by George D. Huncke and Hans F. Sennholz, with general title Capital and Interest and specific titles "History and Critique of Interest Theories" (v.1, orig. 1884), "Positive Theory of Capital" (v.2, orig. 1889) and "Further Essays on Capital and Interest" (v.3, orig. 1909 & 1912).]   



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Major works of Eugen von Böhm-Bawerk

  • Rechte und Verhältnisse vom Standpunkte der volkswirtschaftlichen Güterlehre, 1881 [bk] [Eng. trans. 1962 "Whether Legal Rights and Relationships are Economic Goods", 1962].
  • Capital und Capitalzins: Erste Abteilung, Geschichte und Kritik der Capitalstheorien, 1884.
    • Original 1884 1st. ed; [av]
    • German: 1900 2nd. ed.; 1914 3rd. ed.; 1921 4th ed.[av].
    • 1890 English trans. of 1884 first ed. by W.T. SmartCapital and Interest: A critical history of economical theory [bk, av] [1922 reprint bk., av] [lib][McM]
    • 1902-03 French trans. of 1900 second ed., by Joseph Bernard, Histoire critique des théories de l'intérèt du capital  v.1 [av], v.2 [av]]
    • 1903 English trans. of additional material in 1900 second ed. by W.A. Scott and S. Feilgoben, Recent Literature on Interest (1884-1900): A supplement to Capital and Interest. [bk]  [bk, av] [mis]
    • 1959 English trans. of 1914 third ed. by George D. Huncke and Hans F. Sennholz, Capital and Interest, Vol. I - History and Critique of Interest Theories
  • "Grundzüge der Theorie des wirthschaftlichen Güterwerts", 1886, JNS, v.47 (v.13 NS), Pt. 1 (p.1-82), Pt.2 (p.477-541).
  • "Review of Brentano's Die klassiche Nationalökonomie "  1889, Göttinger Gelehrten Anzeigen, (Jun 1), p.465 
  • "Review of Wasserab's Preise und Krise", 1890, Göttinger Gelehrten Anzeigen,  (Jan 15), p.82
  • Capital und Capitalzins: Zweite Abteilung, Positive Theorie des Capitals, 1889 
    • Original 1889, 1st ed.
    • German: 1902, 2nd ed.,  3rd ed., Pt. 1 (1909) & Pt. 2 (1912), 4th ed. 1921 [av]
    • 1891 English transl. of 1889 ed. by W.T. Smart, The Positive Theory of Capital [av],[lib] [1930 repr, av] [mis]
    • 1959 English transl. of 1909-1912 ed. by George D. Huncke, Capital and Interest, Vol. II - The Positive Theory of Capital.
  • "Ein Zwischenwort zur Wertheorie", 1890, JNS, v.55, p.519
  • "MacVane's Political Economy", 1890, QJE (v.4, Apr) p.331-39 [js]
  • "Professor Giddings on the Theory of Capital" 1890, QJE  (v.4 Apr) [p.347-49] [js]
  • "The Historical vs. the Deductive Method in Political Economy, 1890, AAPSS (Oct),  p.244 [js]  [McM] (trans. Henrietta Leonard of JfN)
  • "The Austrian Economists", 1891, AAPSS (Jan),  p.361 [js][McM]  (orig., trans. Henrietta Leonard)
  • "Wert, Kosten, und Grenznutzen", 1892, JNS, p.321-67 [English trans. as "Value, Cost and Marginal Utility",  2001 by G. Reisman, [pdf], 2002 QJAE, mis]
  • "Unsere Aufgaben", 1892, Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, (v.1) p.1
  • "Kapital", 1892, in J. Conrad, 1892, Handwörterbuch der Staatswissenschaften, v.4  p.649
  • "Patten's Theory of Dynamic Economics", 1892, ZfVSV, p.505
  • "Bonar's Philosophy and Political Economy", 1894, ZfVSV, p.161
  • "Wicksell's Über Wert, Kapital und Rente", 1894, ZfVSV, p.162
  • "Smart's translation of Wieser's Natural Value", 1894, ZfVSV, p.327
  • "Zusatzbemerkung", 1894. ZfVSV, p.512
  • "Der letzte Masstab des Güterwertes: Zusatzbemerkung on Auspitz", 1894, ZfVSV, p.512-18 [English trans. as "The Ultimate Standard of Value",1894, AAPSS (Sep), p.1-60  [js] [av], [McM]]
  • "Sulzer's Die wirtschaftlichen Grundgesetze", 1895, ZfVSV, p.352
  • "Naumann's Die Lehre vom Wert", 1895, ZfVSV, p.355
  • "The Positive Theory of Capital and its Critics: Part I - Professor Clark's Views on the Genesis of Capital", 1895, QJE.(Jan), p.113-31, [js]
  • "The Positive Theory of Capital and its Critics: Part II - General Walker against Capital and Interest", 1895, QJE (Apr), p.235-56 [js] [av]
  • "The Origin of Interest: Reply to Clark", 1895 QJE, (Jul) p.380-87 [js], [av]  [McM]
  • "The Positive Theory of Capital and its Critics: Part III - The Views of Mr. White, Mr. Bilgram, Professor MacVane and Mr. Hawley" 1896, QJE (v.10, Jan),  p.121-55 [js], [av]
  • "Smart's Studies in Economics", 1896, ZfVSV, p.656
  • "Schüller's Die classische Nationalökonomie",  1896, ZfVSV, p.656
  • "Montemartini's Il risparmio nella economia pura",  1896, ZfVSV, p.658
  • "Pierson's Leerbock der Staathuishoundkunde",  1896, ZfVSV, p.658
  • "Zum Abschluss des Marxschen Systems", 1896, in Boenigk, editor, Staatswissenschaftliche Arbeiten, Festgaben fr Karl Knies, p.85-205 [mia] [Eng. trans. 1898 Karl Marx and the Close of his System: A criticism, bk, av, mia, mis
  • "Bergmann's Wirtschaftskrisen", 1898, ZfVSV, p.132 
  • "Zur theoretische Nationalökonomie der letzten Jahre", 1898, ZfVSV, p.400-82  
  • "Einige strittige Fragen der Capitalstheorie", 1899, ZfVSV (v.8), Pt. 1 (p.105), Pt. 2 (p.365), Pt. 3 (p.553) [1900 offprint, av, av]
  • "The Function of Saving", 1901, Annals of AAPSS (May),  p.58 [js], [av], [McM] (reply to Bostedo)
  • "Einige strittige Fragen der Capitalstheorie", 1899, ZfVSV (also as pamphlet, 1900)
  • "Zur neusten Literature über Kapital und Kapitazins", 1906, ZfVSV  [bk, av] [1907 offprint] [mis]
  • "Capital and Interest One More I:  Capital vs. capital goods " 1906, QJE (Dec), [av]
  • "Capital and Interest One More II: A relapse to the productivity theory"  1907, QJE (Feb), [av]
  • "The Nature of Capital: A rejoinder", 1907, QJE [av]
  • Exkurse zur Positive Theorie des Capitals, 1909-1912
    • Orig. appended to 1909-1912 third ed. of Positive Theorie des Capitals.
    • German 1921 "fourth" ed. as Capital und Capitalzins: Dritte Abteilung, Exkurse zur Positive Theorie des Capitals.
    • 1959 transl. by Hans F. Sennholz, Capital and Interest, Vol. III - Further Essays on Capital and Interest
  • "Eine "dynamische" Theorie der Kapitalzinses", 1913, ZfVSV, p.1 [av]
  • "Eine "dynamische" Theorie der Kapitalzinses: Schlussbemerkungen", 1913, ZfVSV  p.640 [av]
  • "Nachwort", 1914, ZfVSV, p.70 [av] (reply to Mezey)
  • "Macht oder ökonomisches Gesetz?", 1914,  ZfVSV, v.23, p.205-71 [av] [audio] [English 1951 trans. "Control or Economic Law?", mis]
  • "Unsere passive Handelsbilanz", 1914, Neue Freie Press
  • "Zins", 1924, in Handworterbuch der Staatswissenschaften
  • Gesammelte Schriften, 1924-1926, ed. F. Xavier Weiss
  • Capital and Interest, 3 vols, ed. George D. Huncke and Hans F. Sennholz, 1959
  • Shorter Classics of Eugen von Böhm-Bawerk, 1962



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Resources on Eugen von Böhm-Bawerk


  • "Review of Böhm-Bawerk's Rechte und Verhältnisse", 1881, SchmJGVV, (v.5.3)  p.1299
  • "Review of Böhm-Bawerk's Geschichte und Kritik der Capitalstheorien", by Otto Pringsheim, 1885, SchmJGVV, (v.9), p.314
  • "Zur Theorie des Kapitals" by Carl Menger, 1888, JNS, p.1-49
  • "The Austrian Economists and their Theory of Value", by James Bonar,  1888, QJE (Oct), p.1-31 [js]
  • "The Positive Theory of Capital", by James Bonar, 1889, QJE  (Apr), p.336-51 [js]
  • "Review of Böhm-Bawerk's Kapital and Kapitalzins",  John Bates Clark,  1889, PSQ (Jun), p.342 [js]
  • "Review of Böhm-Bawerk's Kapital und Kapitalzins", by Gustav Schmoller, 1890, SchmJGVV, (v.14), p.301
  • Austrian-American Capital Debate
    • Oct 1888 James Bonar: "The Austrian Economists and their Theory of Value", 1888, QJE p.1-31 [js]
    • Jan 1889 Simon Nelson Patten: "The Fundamental Idea of Capital", 1889, QJE p.188-203 [js]
    • Apr 1889 James Bonar: "The Positive Theory of Capital", 1889, QJE  p.336-51 [js]
    • July 1889  Franklin H. Giddings:  "The Cost of Production of Capital", 1889, QJE (July) p.503-07 [js]
    • Oct 1889:  James Bonar: "Giddings's Cost of Production of Capital", 1889, QJE, p.81-83 [js] (reply to Giddings)
    • Jan 1890:  Franklin H. Giddings: "The Theory of Capital", 1890, QJE, p.172-206 [js] (reply to Bonar)
    • Apr 1890: J. Bonar & E. v. Böhm-Bawerk: "Professor Giddings on the Theory of Capital" 1890, QJE, p.347-49 [js] (reply to Giddings)
    • Apr 1890: E. v. Böhm-Bawerk: "MacVane's Political Economy", 1890, QJE, p.331-39 [js]
    • Oct 1890 Silas MacVane: "Boehm-Bawerk on Value and Wages", 1890, QJE, p.24-43 [js]
  • "Review of Smart's translation of Böhm-Bawerk's Capital and Interest", by John Bates Clark, 1890, AAPSS (Oct) p.310 [js]
  • "Böhm-Bawerks Kapital und Kapitalzins" by Gustav Schmoller, 1890, Schmollers Jarbuch für Gesetzbegung Verwaltung und Volkswirtschaft,  p.301
  • "Review of Böhm-Bawerk's Kapital und Kapitalzins", by Heinrich Dietzel, 1891, Göttinger Gelehrten Anzeigen, (Nov 15) p.930
  • "Kapitalzins und Arbeitslohn",  by Knut Wicksell 1892, JNS, v. 40, p.852-74.
  • "Boehm-Bawerk's Definition of Capital, and the Source of Wages" by Thorstein Veblen, 1892 QJE (Jan),  p.247-50 [js] [McM]
  • "The Fundamental Error of 'Kapital und Kapitalzins', by F.B. Hawley, 1892 QJE (Apr) p.280-307 [js] ("entrepreneurship" is missing)
  • "Dr. Boehm-Bawerk's Theory of Interest", by Francis A. Walker, 1892, QJE (Jul), p.399-416 [js]
  • "Review of Böhm-Bawerk's Positive Theory of Capital (Smart trans.)", by Henry B. Gardner:, 1892, AAPSS (Mar), p.101 [js]
  • "Review of Zeitschrift fur Volkswirthschaft, Socialpolitik und Verwaltung. by Eugen von Böhm-Bawerk, Karl Theodor von Inama-Sternegg, Ernst von Plener ", by E.R.A. Seligman,1892, PSQ (Sep), p.573 [js]
  • "The Origin of Interest", by John Bates Clark, 1895, QJE (Apr) p.257-78 [js] [McM]
  • "Risk as an Economic Factor", by John Haynes, 1895 QJE, (Jul)   p.409-49 [js] (on Clark, Bohm-Bawerk, Hawley, Carver, etc.)
  •  "Real Issues Concerning Interest", by John Bates Clark,  1895, QJE (Oct) p.98-104 [js] [McM] (reply to Böhm-Bawerk)
  • "A Forerunner of Böhm-Bawerk" by C.W. Mixter, 1897, QJE (Jan), p.161 [js] (on John Rae)
  • "The Function of Saving", by L.G. Bostedo, 1901, AAPSS (Jan), p.95 [js] (on Böhm-Bawerk)
  • "Note on new edition of Böhm-Bawerk's history of interest", 1901, AAPSS (May) p.488
  • "Note on 2nd edition of Böhm-Bawerk's Kapital und Kapitalzins", 1903, ZfVSV p.331
  • "Der Kardinalfehler der Böhm-Bawerkischen Zinstheorie", by Ladislaus von Bortkiewicz,  1906,  Schmollers Jarbuch für Gesetzbegung Verwaltung und Volkswirtschaft, vol. 30 (2), p.61-90
  • Zur Kritik der Böhm-Bawerk'schen Lehre von Kapital und Kapitalzins, by Salman Margolin, 1903 [av]
  • Zur Kritik der Boehm-Bawerkschen Werttheorie, by F. Lifschitz, 1908 [bk]
  • "Review of Böhm-Bawerk's Positive Theorie des Kapitales" by Alvin S. Johnson, 1914, AER (Mar) , p.113 [js]
  • "The Austrian Economists and their Theory of Value", by James Bonar, 1888, QJE, [p.1-31] [js]
  • "The Positive Theory of Capital", by James Bonar, 1889, QJE  (Apr) [p.336-51] [js]
  • "Reply to Giddings's Cost of Production", by James Bonar, 1889, QJE,  (Oct) [p.81-83] [js]
  • "The Theory of Capital" (Reply to Bonar), by F.H. Giddings, 1890, QJE (Jan) [p.172-206] [js]
  • "Professor Giddings on the Theory of Capital" by J. Bonar & E. v. Böhm-Bawerk, 1890, QJE  (Apr) [p.346-49] [js]
  • "Boehm-Bawerk on Value and Wages", by S.M. MacVane, 1890, QJE (Oct) [p.24-43][js]
  • "Comments on the Positive Theory of Capital", by Hugo Bilgram 1892, QJE (Jan) [p.190-206], [js]
  • "Boehm-Bawerk on Capital", by Horace White, 1892, PSQ (Mar), p.133 [js]
  • "Dr. Böhm-Bawerk's Theory of Interest" by Francis A. Walker, 1892, QJE (Jul), p.399
  • "Review of Böhm-Bawerk's Karl Marx", by C.S. Wake, 1898, Monist [js]
  • "Review of Böhm-Bawerk's Karl Marx", by J.B. Clark, 1898, PSQ [js]
  • "Review of Karl Marx's Capital and Böhm-Bawerk's Close of the Marxian System", by W.C. Mitchell,  1899, JPE
  • "Review of  Böhm-Bawerk's Einige strittige Fragen der Capitalstheorie", by W.C. Mitchell, 1900, JPE
  • "Value in Its Relation to Interest: Review of Böhm-Bawerk" by R.S. Padan, 1901, JPE
  • "Review of Böhm-Bawerk's Capital und Capitalzins", by Frank A. Fetter,  1901, JPE
  • "Review of Böhm-Bawerk's Positive Theorie des Capitals", by Frank A. Fetter, 1901, JPE
  • "Böhm-Bawerk on Rae", by C.W. Mixter, 1902, QJE [js]
  • Bohm-Bawerk's Criticism of Marx, by Rudolf Hilferding, 1904 [mia]
  • "Review of Böhm-Bawerk's Positive Theorie des Kapitales", by Alvin S. Johnson, 1914, AER (Mar),  p.113 [js]
  • "Verteidigung und Ergänzung der Böhm-Bawerkschen Preistheorie", by Ludwig Mezey, 1914, ZfVSV, p.63 [av]
  • "Dr. Eugen von Böhm-Bawerk", by Eugen von Philippovich, 1914, ZfVSV, p.439 [av]
  • "Das wissenschaftliche Lebenswerk Eugen von Böhm-Bawerks", by Joseph Schumpeter, 1914, ZfVSV. p.454 [av]


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