Here is a an excellent review of Baum Bawerk's contribution to Austrian economics, which one should read in toto:
And here is an excellent critique on this one point, pages 197 through 215.
Feel free to forward this by email to three of your friends.
This led Böhm-Bawerk to his theory of interest. Obviously, individuals evaluating the production possibilities just discussed must weigh ends available sooner versus other (perhaps more productive) ends that might be obtainable later. As a rule, Böhm-Bawerk argued, individuals prefer goods sooner rather than later.
Each individual places a premium on goods available in the present and discounts to some degree goods that can only be achieved further in the future. Since individuals have different premiums and discounts (time-preferences), there are potential mutual gains from trade. That is the source of the rate of interest: it is the price of trading consumption and production goods across time.
And here is an excellent critique on this one point, pages 197 through 215.
Feel free to forward this by email to three of your friends.
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