Eugen von Böhm-Bawerk was born in Vienna and studied law at the University of Vienna. He was an Austrian economist who developed a theory of capital that emphasized the idea of "roundaboutness", (lengthening of the production period). Acco rding to Böhm-Bawerk, there are three reasons why interest rates are positive; 1.)People's marginal utility of income will fall over time due to expectations of higher income in the future, 2.) the marginal utility of a good falls over time, and 3.) the technical superiority of present goods over future goods. He also believed that further investment in capital increases roundaboutness, and as a result, interest rates would be positive even if the other two reasons did not hold. It is due to t he existence of this "roundaboutness" that , according to Böhm-Bawerk, interest does not exist due to the exploitation of workers, as Marx argued.
Works by Eugen von Böhm-Bawerk:
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