[[Categoria:Pagine che usano RigaIntestazione|Scientia - Vol. IX.djvu{{padleft:392|3|0]]that an investment of 100 dollars in productive land, machinery, or any other form of capital, will yield a rate of interest proportionate to its productivity. This proposition looks attractive, but it is superficial. Why is the land worth 100,000? Simply because this is the discounted value of the expected 5000 a year. The value of capital is derived by the process of « discounting » from the value of its income, not the value of the income from that of the capital. But whenever we thus discount income, we have to assume a rate of interest. One hundred thousand dollars is a capitalization calculated on the basis of 5 per cent interest. If we capitalize 5000 dollars at 5 per cent, and get 100,000, we naturally find that we are getting 5 per cent on the investment, for we assumed 5 per cent in the first place. We get out exactly what we put in.

Besides the productivity theory (which itself has many variations) there are numerous other theories, such as the following: that interest represents labor saved by capital; that interest is the reward of abstinence, or of waiting; that interest is the cost of managing capital: that interest is the exploitation of laborers by capitalists. The last is the socialist’s theory. To the socialist, interest appears an evil — the evil — and he thinks it ought to be abolished. He says: « It is all wrong that the capitalist who does not lift a finger should get any pay; he is getting something for nothing, namely interest; interest is robbery; interest is sucking the blood out of the underman, viz. the workman ».

The socialist’s position involves two propositions: first, that practically all income and all capital are produced by labor; and secondly, that all income should be paid to the laborer. Now the first proposition is much more nearly correct than the second. We need not contest it in order to see the fundamental error in the theory of socialism. Let it be granted that practically every instrument of production is produced by labor; let it be granted that the capitalist is always living on the product of past labor. Yet as Bohm-Bawerk says:

« The perfectly just proposition that the laborer should receive the entire value of his product may be understood to mean either that the laborer should now receive the entire present value of his product, or should receive the entire future value of his product in the future. But Rodbertus and