34

Frank A, Fetter [March

Of course, there must be future expected uses, (incomes), that is,
productivity, as there must be men, if there is to be a valuation
process, and as there must be some social organization if there are
to be markets and prices. But if the future value of the products
were not discounted, there could be no rate of interest,
It varies with the magnitude of the time-discount at which borrowers,
 on the whole, are able to buy the title to the future products
 ; and time-discount varies with changes in the whole complex
economic situation, of which technical Productivity is but one
element, others being forethought, provision for needs in accordance
 with a prevailing standard (itself a complex thing), social
and moral ideals, political conditions, etc., ete. It is the opportunity
 which the possession of ready money gives to the enterpriser
to buy goods at a price involving a discount proportional to the
futurity of the expected returns, that makes him willing to contract
to pay interest. When these expected returns (the products) do
appear in the course of time, their value-magnitude is, or should
ve, greater than was their investment magnitude, and it is out
9f this value-surplus, directly conditioned on am antecedent disount
 of the value-productivity, that contract interest is paid.
Before leaving this phase of our subject, let us look at it from
one more angle, in the hope that some reader may find this a more
helpful point of view, My contention throughout has been that
the productivity theory in any of the versions known to me, and,
specifically, in the entrepreneur version, defended by Seager, involves
 a confusion between physical-productivity and value-productivity
 ; that in the course of the reasoning there is a shift from
the one idea to the other. Seager admits that this confusion “has
sometimes occurred,”””* but he believes that there is a “necessary
or logical connection between Physical-productivity as a general
phenomenon of capitalistic production and value-productivity.”
To bridge this logical gap seems to him, however, to be so simple
a task that express proof of it may be assumed “to be superfluous,”
for he thinks it is merely “an obvious deduction from the accepted
principles in regard to the determination of exchange values and
prices.” His proposition, therefore, is substantially this:* "The
capital (agents) by virtue of its technical Productivity here and
now, produces more goods, and these goods have (when commodities
 generally are considered, and not some exceptional commodity)

” AMERICAN EcowomMmIic REvızw, p. 842,
* Tdem, pp. 842-843,