| Sumario: | One of the most famous developments in the history of economic thought is the theory of Bohm-Bawerk, as formalized by Wicksell, that relates the wage rate (w), the value of capital stock (K), the rate of interest (r), and the "period of production" (θ) in the stationary state. Dorfman has recently given a concise and instructive exposition of this system. Part I of this paper provides, on an elementary level, a critical interpretation of the Bohm-Bawerk/Wicksell system, leading (in increasing order of importance) to the following conclusions: (1) That the approximation error in the Bohm-Bawerk/Wicksell capital-value formula is of far from negligible magnitude. (2) That Wicksell's formalization constitutes an under-determined system, an incomplete theoretical structure. (3) And, consequently, that the system is not a theory of interest; rather than determining the rate of interest, the equation system is consistent with any arbitrarilyimposed exogenous interest rate. After some discussion of the nature of the analytical errors involved, in Part II the BohmBawerk/Wicksell system will be formally completed by bringing in time-preference considerations. A numerical example will be provided as an aid to intuition.
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