Abstract
Within the resurgence of Austrian economics in the seventies two neo-or modern Austrian schools can be distinguished: that of BÖHM-BAWERK-based neo-Austrian capital theory and that of modern Austrian subjectivism.1 The former — of which most contributions to this volume are representative2 — is severely criticized by the latter from a perspective that claims to be the only truly Austrian. While the common “Austrian” feature of both schools is their concern with the time aspect of economic activity, modern Austrian subjectivists claim to possess a paradigm truly distinct from what from this perspective looks like a monolythic neoclassical/ (BÖHM-BAWERKian) neo-Austrian orthodoxy. More specifically they oppose the orthodox productivity-cum-time-preference theory of interest with a pure time-preference theory of interest (henceforth PTPT). This PTPT is to be seen within the context of their purely subjective theory of value in general. In my other contribution to this volume I tried to show how the subjectivist claim to possess a different paradigm can be justified, how the concern with time in both schools takes on almost opposite forms, and how the PTPT is a consistent application of the subjectivist paradigm. From the PTPT there also followed a distinct theory of distribution in which interest is not seen as a productivity return on a par with wages and land rent.
Most research for this paper was done as an Austrian fellow at New York University. I cannot overemphasize how much it owes to Professor ISRAEL M. KIRZNER in discussion with whom and in suggestions of whom most of the ideas presented here originated. Preliminary and final research was done at the University of Heidelberg. My special thanks here to Professor MALTE FABER for his support. I would also like to thank the members of the Austrian Colloquium at New York University, the Center for the Study of the Market Process’ Austrian Colloquium at George Mason University and the Mises Institute Austrian Colloquium at Auburn University and my colleagues FRANZ-JOSEF WODOPIA, GUNTER STEPHAN, FRIEDRICH BREYER and ULRICH WITT for helpful discussion of a first draft on the present paper. The usual disclaimer applies.
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Pellengahr, I. (1986). Austrians versus Austrians II: Functionalist versus Essentialist Theories of Interest. In: Faber, M. (eds) Studies in Austrian Capital Theory, Investment and Time. Lecture Notes in Economics and Mathematical Systems, vol 277. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-51701-3_5
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DOI: https://doi.org/10.1007/978-3-642-51701-3_5
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