Eugen von Böhm-Bawerk, Austrian economist at the University of Vienna, and Austrian finance minister, made the modern intertemporal theory of interest rates possible in his work Capital and Interest. His second book in this series of two, The Positive Theory of Capital, continued on to study the accumulation and influences of capital, proposing an average period of production. This work on capital stood in contrast to the contemporaneous work of John Bates Clark on the marginal productivity of capital, and set off a great debate in economics. Although marginal productivity theory proved more accurate, Böhm-Bawerk's highlighting the importance of thinking clearly about interest rates and their intertemporal nature permanently changed economic theory. In the process, he also helped highlight errors in the economic foundations of socialism, as proposed by Rodbertus and Marx. Böhm-Bawerk was influenced by Carl Menger; Ludwig von Mises and Joseph Schumpeter were Böhm-Bawerk's students.

Eugen von Böhm-Bawerk, the great economist and finance minister of the Austro-Hungarian Empire, is a pillar of the Austrian School. As the champion of the then-emerging marginalist school, this great work brought him more fame than even Carl Menger had in his day.

Here is the original English translation, by Scottish economist William Smart, of Capital and Interest. This translation had a large impact on the American and British economic scene, and its treatment of the text retains its clarity and insight more than a century after its initial publication. This edition is the first that has been available in many years.

With depth and lucidity, Böhm-Bawerk surveys and critiques failed theories of interest from antiquity to modern times, presents a full theory of the structure of production, and defends the importance of capital in production and time in the determination of the interest rate.

The broad implications of this work are being rediscovered today by younger Austrians who are building on his foundation for Austrian production theory. Capital and Interest does not only address economics, however. As Mises said, this voluminous treatise is the royal road to understanding of the fundamental political issues of our age.