Year: 2026
Type: book-review
Abstract: Austrian Theory of Capital and Business Cycle: A Modern Approach, by PavelPotuzak, is an interesting book and should be read by scholars in the Austrian tradition.I recommend it not because I agree with it but because I disagree with several of its assumptions and with its resulting analysis.Scholarly disagreements are necessary for scientific progress to be made, and I hope that these challenges will result in the further advancement of our discipline.Many who are familiar with the Austrian school of economics think there is a unified perspective toward its approach; however, while there are important commonalities between them, Austrian economics divides into several branches.One of the earliest splits was between Austrian founder Carl Menger and his best-known student, Eugen von Böhm-Bawerk, over issues of interest and capital theory.Specifically, Böhm-Bawerk (1959) posited three factors in the formation of interest rates.The third, concerning how the productivity of capital influenced the interest rate, was controversial.Most Austrian economists reject this third factor and adhere to the pure time preference theory of interest rates.Potuzak adopts Böhm-Bawerk's position and explicitly rejects this theory.It is from this point of view that Potuzak develops his capital and business cycle theory.The book is divided into two parts and has nine chapters.The first part, "The Austrian Theory of Capital," is covered in chapters 2 to 4, while chapters 5 to 8 cover Austrian business cycle theory.The second chapter, on Austrian capital theory (ACT), discusses the main topics in ACT but oddly omits any mention of Israel Kirzner's notable book An Essay on Capital (1966).Nonetheless, Potuzak approaches ACT
DOI: 10.35297/001c.154305
Author: Paul F. Cwik
Institution: University of Mount Olive
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7127366782