ABSTRACT
Bhm-Bawerk examines what induces a permanent difference between the value of the capital employed and its product. Ever since the publication of Bhm-Bawerk's great work, his approach to the problem of interest on capital has dominated the discussion, at least in the context of value theory. He raises the question why in any time-consuming production process the value of the product invariably exceeds the value of the goods which are used in its production The inadequacies of Bhm-Bawerk's approach to value theory are obvious enough with respect to the narrow domain of interest theory. This chapter presents the partial modification of Bhm-Bawerk's formulation of the problem, which was adumbrated. The solution to the problem of how the disposal of given goods is determined by fundamental economic data is complicated by the well-known phenomenon to which Bhm-Bawerk refers as greater productiveness of roundabout production, the higher productivity to be obtained from given producer goods by more time-consuming production processes.
