OBJECTIONS CONSIDERED

of my statement that a certain decrease of present incomewill be accompanied by a certain increase in future in-come. The relation between the immediate decrease andfuture increase will vary within a wide range, whereinthe choice will fall at the point corresponding to theruling rate of interest.

The same relationship was conceived by AdolpheLandry in his Interet du Capital. He states that one ofthe conditions determining the rate of interest is the“productivity of capital”, in the peculiar sense which hegives to this phrase , 25 which is, in effect, the rate ofreturn over cost.

It has seemed to me that much of the criticism, bothfavorable and unfavorable, of my book, The Rate of In-terest, has been based on the erroneous assumption thatthe so-called productivity element found no place in mytheory. Much of the misunderstanding of my theory mayhave been fostered by the lack, in my first book, of a goodterm with which to express this productivity factor ininterest.

As a consequence, one critic, Professor Seager, writesthat I refuse to admit that what Bohm-Bawerk calls the“technical superiority of present over future goods”, andwhat other writers have characterized more briefly as“the productivity of capital” has any influence on thecomparison between present gratifications and futuregratifications in which, as he believes, the complete andfinal explanation of interest is to be sought.

“The most striking fact about this method of present-ing his factors”, this criticism continues, “is that he dis-sociates his discussion completely from any account ofthe production of wealth. From a perusal of his Rate of

” Landry, L’lnteret du Capital, pp. 66-95.

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