THE THEORY OF INTEREST

above. 39 I have omitted certain of the less important ofmy original criticisms to which Bohm-Bawerk hasreplied.

Perhaps the most interesting point about Bohm-Bawerk’ s failure correctly to formulate the “technical”feature which he thus vainly sought is that it is reallymuch simpler than he imagined. It does not require hiselaborate tables and comparisons among their many col-umns. Merely the first column of his tables containsimplicitly the true “technical” feature in one of its manyforms of choosing from among optional income streams.This shows the successive amounts of product obtainablefor a series of production periods of different lengths.This series is exactly analogous to the successive or-dinates in Chart 16 showing the lumber to be obtainedfrom a forest at different dates. There comes a point insuch a series or such a curve, where a further lengtheningof the time by one year will add to the product over thepreceding year (i.e., will yield a rate of return over cost

* Bohm-Bawerk claims that merely to find out the factors operativein a given problem is not the same thing as to explain those factors.He thinks that my theory of interest would be adequate only if themathematical solution of the problem by means of simultaneous equa-tions, and what he calls the “causal” solution were the same, or atleast somewhat similar.

Of course, these two types of solution are not the same. The causalsolution cannot be so simply conceived as to make one factor solelycause and another solely effect. The advance of all science has requiredthe abandonment of such simplified conceptions of causal relationshipfor the more realistic conception of equilibrium.

Here, all factors are considered as variables. Any disturbance in onefactor reacts on all the others, and the variations in these other factorsreact upon the factor of original disturbance. The mathematical solutionof the problem of interest by means of simultaneous equations recog-nizes the mutual interdependence of all the factors in the interest prob-lem and, at the same time, yields a determinate solution for the problem.

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