Wieser's Theory of Capital and Interest Is Mostly Still Unappreciated in the Literature; Instead, There Has Been Extensive Analysis of the Theory Provided by Böhm-Bawerk and Refined by Wicksell

It has been said of Wieser that he ‘occupies a position of indisputable importance in the history of economics’ and that he ‘presented one of the best theories of capital which had emerged’ in his time (Stigler 1941:158, 177). Yet Wieser’s ([1889] 1930) theory of capital and interest (which is later enunciated and extended in Wieser 1891; [1914] 1927) is mostly still unappreciated in the literature. Instead, there has been extensive analysis of the putative apotheosis of ‘Austrian’ capital and interest theory provided originally by Böhm-Bawerk in 1888 and later refined by Wicksell (e.g. Kregel 1976:28–33; Blaug 1978:498–569; Brems 1988; Negishi 1985; Niehans 1990). As well, Streissler (1972: 434–6) concentrated exclusively on those elements in Böhm-Bawerk’s capital and interest theory that possibly displeased Menger. To anticipate one of our conclusions in this chapter, Streissler omitted to give an account of Menger’s attitude to Wieser’s formulations of the capital and interest problem, and we suspect, from the evidence presented here, that Menger would have sympathized with many of Wieser’s ideas.

Accordingly, in this chapter we give special consideration to Wieser’s much-neglected capital and interest theory in order to assess its origins and composition, and ultimately to estimate the extent of Wieser’s departure from the Menger tradition. We compare, as and where the detail of our exposition demands, Wieser’s theory of capital and interest with other contemporary Austrian and non-Austrian treatments of that subject. Our attention will also be focused on the relations between Wieser’s theory and the broad directions given by Menger for the construction of an adequate theory of capital and interest . . . As far as interest theory was concerned, Menger’s ideas were very much inchoate. Among the other founding Austrians, Wieser offered an alternative to Böhm-Bawerk’s contribution on this subject.

--A. M. Endres, Neoclassical Microeconomic Theory: The Founding Austrian Version, Routledge Foundations of the Market Economy (London: Taylor and Francis e-Library, 2002), 180.

Menger Hinted That Theoretical Economics Must Trace Economic Phenomena Back to Their Psychological Causes; Austrian Theory, Unlike Walrasian Economics, Was Founded on Introspection

Wieser and Böhm-Bawerk retained the styles of reasoning favoured by Menger. Menger merely hinted that theoretical economics must trace economic phenomena back to their ‘psychological causes’. Much later, Wieser expanded on what he believed to be the ‘psychological’ orientation of economic theory—theory which, it should be stated, paralleled Menger’s ‘exact’ theory in most important respects. The ‘“psychological” theory of economics’ was developed by introspection, that is, by ‘observations concerning the inner life of man’. . . . Schumpeter’s book had attempted to reconcile the irreconcilable—namely the central propositions and concepts of Austrian and Walrasian economics. His attempt failed because he neglected to appreciate that Austrian theory, unlike Walrasian economics, was founded on introspection.

--A.M. Endres, Neoclassical Microeconomic Theory: The Founding Austrian Version, Foundations of the Market Economy (London: Routledge, 2002), 15-16.