before. However, there are constraints, or brakes, on Produktionsumweg: namely, positive time preference and interest rates. Böhm-Bawerk used his “agio theory” to explain interest as flowing from the generally universal higher valuation placed on present versus future goods (e.g., most people would want a good today versus the same good tomorrow, or in a year’s time). This is true of all goods in general; thus, there is a positive interest rate. This framing of the market phenomenon of interest as a result of subjective preferences was a quintessentially Austrian insight and the heart of the
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Important insight for climate change
