This is the second book in the series of Boehm-Bawerk translations by Scottish economist William Smart, originally published in 1891. It is, as the title suggests, the positive theory of capital.
It begins with full front matter by Smart himself, and then we come to book one: The Nature and Conception of Capital. Six sections follow: Capital as an Instrument of Production, Value, Price, Present and Future, The Source of Interest, The Rate of Interest, and finally a rich and detailed index.
It follows the author's legendary method of systematically thinking and clear exposition to present what is called today the time-preference theory of interest, that is to say, that the passage of time and the preference for the present over the future are the necessary and sufficient conditions for the emergence of interest. Capital is the correlary to that notion: all production takes place over time.
This is the first time this translation has been in print in longer than half a century.
Social and Private Capital
A few remarks still remain to be made on the relation in which the two divisions of our conception, Social (or Productive) Capital, and Private (or Acquisitive) Capital, stand to one another. When enumerating and reviewing the various theories, I have already expressed my views generally on this point, and may here shortly sum them up. Private Capital, as we now call it, is the parent conception. It is not so much a branch, or a subdivision of the general conception of capital, as the conception itself. The conception of National Capital, or, more correctly, Social Capital, has detached itself from the other, in the historical development of theory, as a narrower conception. Substantially it is a quite independent conception. In every essential respect (in definition, in scientific employment, and in scope) it stands on entirely independent principles. It is bound up with the conception of Private Capital only by the external and subordinate circumstance, that the aggregate of its ""intermediate products"" happens to coincide in extent with the aggregate of those products which are the source of income to society as a whole,—those products which constitute capital in the older sense. But through a historical accident it is this subordinate feature that has had most to do with the naming of the new conception; and thus it also bears, and will perhaps continue to bear, the name capital. And this circumstance, so long as the whole relation was not clearly understood, led to the lamentable tangle so often spoken of, that not only the conceptions themselves, thus similarly named, but the fundamentally distinct problems connected with them, were confused and interchanged.
Eugen von Böhm-Bawerk
Eugen von Böhm-Bawerk (February 12, 1851 – August 27, 1914) was in the right place at the right time to contribute importantly to the development of Austrian economics.
Böhm-Bawerk together with Carl Menger and Friedrich von Wieser were the three pillars that established the Austrian school.
Böhm-Bawerk's contributions laid the foundation for the theory of capital, and in later development by others such as Knut Wicksell, the modern understanding of interest in terms of compensation for the use of capital. He emphasized the role of time in determining the value of goods, and developed marginal utility theory into a theory of prices. His work addressed significant economic questions such as how to increase capital, and what is the justification for charging interest. Böhm-Bawerk was the first economist to refute Karl Marx's claim that capitalists exploit workers. He argued that in fact they provide a service to workers by paying them in advance of payment the owners receive for sale of the goods produced by workers. Böhm-Bawerk's view of economic processes included the actual situation and expectations of people involved, not just material measures of quantity of goods and hours of labor. In this way, his answers came closer to addressing the real situation of human society and how we can cooperate together to the benefit of all.