Eugen von Böhm-Bawerk

Eugen Böhm, later Ritter von Bawerk, was born on 12 February 1851 in Brno (Brünn), Moravia. He studied law at the University of Vienna, where he read Carl Menger’s Principles of Economics (1871) and became its adherent, although he never studied under Menger; his classmate, and later brother-in-law, was Friedrich von Wieser. After his doctorate in law (1875) he studied political economy at Heidelberg, Leipzig and Jena.

He taught at the University of Innsbruck (1881–1889), where he wrote the first two volumes of Capital and Interest: the History and Critique of Interest Theories (1884) and The Positive Theory of Capital (1889). Interest, he showed, arises from a simple fact: people value present goods more highly than future goods of the same quantity and quality. “Roundabout” production, which takes time and capital goods, is more productive, and the capitalist who pays wages before the product is sold advances the workers an income; he does not exploit them. In Karl Marx and the Close of His System (1896) he showed that the third volume of Capital contradicts the labour theory of value of the first.

He served three times as Austria’s minister of finance (1895, 1897–1898 and 1900–1904). He defended the legally fixed gold standard and a balanced budget, abolished the sugar subsidy in 1902, and resigned in 1904 when military spending threatened the budget. His portrait appeared on the 100-schilling banknote (1984–2002).

In 1904 he returned to teaching, with a chair at the University of Vienna; Ludwig von Mises and Joseph Schumpeter attended his seminar. In 1911 he became president of the Academy of Sciences. His last essay, “Control or Economic Law” (1914), argues that no government decree can override the laws of the market. He died on 27 August 1914 in Kramsach, Tyrol. Mises called Capital and Interest “the most eminent contribution to modern economic theory”.

Sources: Mises Institute — Eugen von Böhm-Bawerk (Roger W. Garrison) · Wikipedia — Eugen von Böhm-Bawerk