The Marginal Productivity Versus the Impatience Theory of Interest

1. The marginal productivity theory, 630. — Complete analysis required, 632.—The impatience theory, 633.— Position here taken, 634.— 2. Marginal productivity of waiting keeps interest rate up by acting on demand for present goods, 635. — Action is direct and not merely through effect on impatience, 636. — Comparison emphasized is not between present and future goods, but between greater and less amount of future, 637. — Fisher's criticism of Böhm-Bawerk criticized, 638. — 3. Marginal productivity of waiting keeps interest rate up by acting on the supply of present goods, 640. — Increased marginal productivity of waiting means higher interest, 642. — Basis of capital valuation, 644. — Distinction between land and made capital, 644. — Rate of interest and rate of impatience in part joint effects of rate of productivity of waiting, 645. — 4. Marginal productivity of waiting by acting both on demand for and supply of present goods, keeps the rate of interest from exceeding this rate of productivity, 646. — As rates of impatience and interest are both influenced by productivity of waiting, so rates of interest and marginal productivity are both influenced by impatience, 648. — 5. Recapitulation, 649.