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The 4th and final volume contains a brief appendix by Mises on the work of Boehm-Bawerk and a gloasary of terms prepared by the editor.

A Critique of Böhm-Bawerk’s Reasoning in Support of His Time Preference Theory

In order to appreciate this critique, it is important to realize that, while Mises gave Böhm-Bawerk full credit for his important analysis of the phenomenon of interest, he pointed out here that Böhm-Bawerk failed to understand why present goods regularly attain a higher value than physically identical future goods do, i.e., the sole cause giving rise to the phenomenon of interest. Mises went on to explain in Nationalökonomie, as he does in Chapter 18 of Human Action, that time preference is an inherent category of human action. For the same reason that “a bird in the hand is worth two in the bush,” present goods are worth more than the identical items in an uncertain future. Present goods are more valuable than future goods, not because of some psychological factor or personal value judgment of particular persons at particular times and places—but simply because the present goods are available here and now and the future goods are not. Thus, interest is a praxeological consequence of man’s cognition of time. Individuals are bound—by the limitations of the universe and the very nature of man with his a priori or innate awareness of time—to place a lower value on future goods than they do on present goods. However, to call this lower valuation an under-valuation, as Böhm-Bawerk did, is a judgment of value and not a scientific statement.

Ludwig von Mises

Ludwig Heinrich Edler von Mises (1881-1973) was the acknowledged leader of the Austrian School of economic thought, a prodigious originator in economic theory, and a prolific author. Mises’ writings and lectures encompassed economic theory, history, epistemology, government, and political philosophy. His contributions to economic theory include important clarifications on the quantity theory of money, the theory of the trade cycle, the integration of monetary theory with economic theory in general, and a demonstration that socialism must fail because it cannot solve the problem of economic calculation. Mises was the first scholar to recognize that economics is part of a larger science in human action, a science which Mises called “praxeology”. He taught at the University of Vienna and later at New York University. Mises wrote many works on two related economic themes: 1. monetary economics, inflation, and the role of government, and 2. the differences between government-controlled economies and free trade. His influential work on economic freedoms, their causes and consequences, brought him to highlight the interrelationships between economic and non-economic freedoms in societies, and the appropriate role for government.