tailieunhanh - History of Economic Analysis part 94

History of Economic Analysis part 94. At the time of his death in 1950, Joseph Schumpeter-one of the major figures in economics during the first half of the 20th century-was working on his monumental History of Economic Analysis. A complete history of humankind's theoretical efforts to understand economic phenomena from ancient Greece to the present, this book is an important contribution to the history of ideas as well as to economics. | History of economic analysis 892 Bohm-Bawerk in his critical history of interest theories dealt with Ricardo s and Marx s theories of profit without raising the question whether the returns thus denoted were really the same thing as interest. He would have answered this question much as or had answered it. Monetary interest remained for him simply the shadow of the interest that is earned by supplying physical goods which really were what though perhaps in the form of money the capitalist owned. This is all the more remarkable because Bohm-Bawerk s own work was principally instrumental in dissolving this schema. To begin with it is not recognized sufficiently that Bohm-Bawerk s criticisms of existing explanations of interest awoke a new awareness of the problem involved in that view of the matter. It is true more or less that all the theories of interest survived that had been inherited from the preceding period. Even a theorist of Pareto s rank felt no compunction in declaring that the fact that physical capital bears interest was not more of a problem than is the fact that the cherry tree bears But the standing of some of the simple theories that used to satisfy a majority of economists rapidly declined. Few writers cared to go on holding that because one can produce more wheat with the help of a harrow than without it a net return must result from using it Bohm-Bawerk s admonition that the physical productivity of capital is not enough to prove its value productivity took the wind out of the sails of the productivity theory of interest even though it was not immediately Similarly Bohm-Bawerk showed successfully that in themselves use theories of interest Knies Menger Walras were no good there is no doubt that the services of durable goods such as houses or machines are priced and that their prices times their quantities constitute returns to the owners of these goods but since these goods have to be insured and amortized .