Chapter VIII. The Eclectics

CHAPTER VIII

THE ECLECTICS

BY no means inconsiderable in the most recent times is the number or the importance of those theorists who base their explanation of interest in an eclectic way on elements of different theories. As I have taken the opportunity on a previous occasion to say, this is not to be wondered at.¹ One can scarcely fail to recognize the truth, which has been very clearly brought to view by the most recent investigations in this field, that more than one group of facts stand in a casual relation with interest. Especially is this the case with the greater fruitfulness of capitalistic production on the one hand, and of the postponement of gratification connected with every investment of capital on the other. On each of these two points independent theories have been founded, and as long as no outcome in the form of a solution appeared, or was acknowledged as such, which permitted one to view the inter-workings of these heterogeneous half causes from one single point of view, authors of broad vision who do not close their eyes to any of the facts of experience are easily led to an eclectic combination.

I have already spoken of Loria, who combined elements of the abstinence with those of the exploitation theory.¹ Diehl combines a sort of indirect productivity theory with considerations and expressions peculiar to the use theory.² Modes of expression characteristic of the latter theory are found in Sidgwick side by side with arguments which expound and defend the abstinence theory.³ On this account I think it likely that the modes of expression which reflect the spirit of the use theory are employed in a merely incidental manner, and that the real opinion of that distinguished writer is actually represented by the abstinence theory. Neurath’s somewhat vague expressions do not indicate any clearly worked-out theory, but rather a partial agreement with or inclination toward a whole series of traditional methods of explanation.¹ I do not believe that I shall meet with opposition, if I place the learned and intellectual author of “Progrès de la Science Economique depuis Adam Smith,” Maurice Block, among the eclectics. As a convinced believer in the complete justification of interest, he could not make up his mind to abandon any of the numerous conceptions which seemed to him equally plausible and favourable to interest. In his copious disquisitions on that subject I find the productivity theory represented as well as the abstinence and the use theories.² That for the eminent scholar himself the thought of being considered an eclectic had no terrors is proved by an earnest plea, doubtless intended as an oratio pro domo, which he once made in favour of eclecticism.³

Charles Gide’s expressions seem to me to lean partly toward the use and partly toward the agio theory,¹ Nicholson’s partly toward the agio and partly toward the abstinence theory.² The latter combination appears rather frequently in recent times, as I have shown in Chapters II and IV.

Among the authors inclined to eclecticism Dietzel occupies a special place. This always intellectual, but not always coolly reflective, author, in a detailed review of my theory of interest, has acknowledged himself to be an eclectic on principle, in the sense that he regards the different current theories of interest, especially the exploitation and productivity theories taken together, as pertinent and applicable each to a part of the phenomenon of interest. He thinks that “in the field of interest different explanations, conditioned by the difference in the economic positions and relations of individuals, should be formulated for the different categories of socio-economic phenomena.” For example, if the hirer of a piano or a house possesses a capital large enough for the purchase of the piano or house, yet prefers to invest or leave it in a productive undertaking, the interest which the possessor of the house or piano receives may be fittingly explained by the productivity of capital. If, however, the tenant does not possess capital sufficient to buy the hired object, then the interest could only be explained as an exploitation of the tenant, and the “exploitation theory (undeniable in its essence) becomes the explanation of interest.”¹ Dietzel also defends the use theory,² and finally, if I have correctly understood him, grants to my theory of interest justification for a certain group of interest phenomena, namely, for the explanation of interest in the case of credit granted for purposes of consumption.⁸

As I fully explained in another place⁴ not long ago, I consider Dietzeln point of view regarding methods as very unfortunate and quite untenable. Something may indeed be said against eclecticism of every kind. Still it makes a great difference whether, as eclectics have been accustomed to do, one invents for the explanation of a phenomenon a theory in which incoherent elements of different theories are combined into an external unity, or whether, as Dietzel desires, for each group of instances of one and the same phenomenon one works out or recognizes a totally new and fundamentally different theory. If that form of income, which economists are accustomed to comprehend under the head of interest or rent of capital, in contradistinction to rent of land, wages of labour, and profits of the entrepreneur, has anything really characteristic about it which binds together the cases belonging under this head and separates them from the other sorts of income, then that characteristic something cannot possibly be different in every case, certainly not fundamentally different and even contradictory. Nevertheless, he who, with Dietzel, attempts to explain instances of the same fundamental phenomenon by means of contrasting theories, in the first place cannot avoid getting entangled in absurd inferences; as, for example, Dietzel, when he concludes that the possessor of a house who in two succeeding years lets the sanu luxurious dwelling for 2000 florins, one year to the manager of a bank with a salary of 15,000 florins, and the second year to a manufacturer with an income from property of 15,000 florins, owes his interest in the first case to exploitation and in the second to the productivity of capital! In the second place, he cannot avoid entanglement in the most obvious contradictions, since each contrasting theory contains premises which we must acknowledge if we wish to explain a single instance in the spirit of that theory, and which are in complete opposition to the premises of other theories which it would be likewise necessary to recognize in order to explain other instances according to Dietzeln plan. Can any one who regards the exploitation theory as essentially correct explain any given case of interest in the spirit of the productivity theory or vice versa? In my opinion, Dietzel has been able to escape these palpable inconveniences only because he, perhaps rather hastily, announced his maxim in the capacity of a critic instead of that of a systematic exponent of doctrines, and therefore had no occasion to attempt to put its applicability to a practical test.

¹ See “Capital and Interest,” Smart’s translation, p. 396.

¹ See above, Ch. IV.

² P. J. Proudhon, “Seine Lehre und sein Leben,” Pt. II, Jena, 1890, pp. 217–225, and p. 204.

³ “Principles of Political Economy,” 2d ed., London, 1887, pp. 167, 168, 255 sq. and 264.

¹ “Elemente der Volkswirtschaftslehre,” 2d ed., Vienna, 1892, pp. 282 sq., 313 sq., and 324 sq.

² See “Progrès” (Paris, 1890), Vol. II, pp. 319, 320, 328, 335 sq.; also pp. 321, 326, 339, 340–342, and 348.

³ Ibid., p. 334; see also p. 349.

¹ “Principes d’Economie Politique,” 5th ed., p. 451, footnote.

² “Principles of Political Economy,” London, 1893–1897; see especially Vol. I, p. 388, and Vol. II, pp. 217 and 219.

¹ Gottinger Gelehrte Anzeigen, 1891, No. 23, p. 930 sq., especially pp. 932–935.

² Ibid., p. 933.

³ Ibid., p. 932 sq.

⁴ “Einige strittige Fragen der Capitalstheorie,” Vienna, 1900, p. 84 sq.