The Stationary State and the Technological Superiority of Present Goods

In an illuminating article on Austrian capital theory published recently in this Journal1 Professor Robert Dorfman repeats with seeming approval Böhm-Bawerk’s ‘Third Ground’ for the existence of interest: an alleged technological superiority of present over future goods. He asserts, even more strongly than Böhm-Bawerk, the independence of this Third Ground from the prior two, which we shall categorize jointly as ‘time preference’. Dorfman says, ‘The validity of this dictum [the technological superiority of present goods] does not depend on time-preference or the perspective underestimation of future wants or any such subjective and perhaps irrational consideration.’ He continues: ‘It depends on the ability of present (consumer goods) to finance an accumulation of (capital goods) that will enhance the flow of future (consumer goods).’2 It is not immediately apparent that future consumer goods do not possess this same capacity or that they possess it consistently to a lesser degree.