Sec. 9] EARNINGS AND INCOME 247

and outgo, the income at any point consisting of the sum
of the ordinates above the base line AC’, and the outgo
of the sum of the ordinates below.
This case brings into juxtaposition two different points
of view from which the interest on capital may be considered.
 Professor J. B. Clark conceives of interest
as the net difference between the rate of total income
and rate of total outgo at any point, and compares
this net return with the capital-value as it exists at that
point. This concept treats the outgo or cost of production
as simultaneous with the income, that is, it takes into consideration
 any small section of the curves in Figure 9
contained between any two vertical lines a short interval
apart. Professor Bshm-Bawerk, on the other hand, always
thinks of cost of production as preceding income. He
fixes his attention on the elementary income stream ABC,
and contrasts the outgo or cost between A and B with the
later income between B and C. These two points of view
are evidently quite reconcilable, though their authors do
not seem to have realized the fact. Each carries his own
special point of view throughout his treatment of capital
and interest. Professor Bohm-Bawerk regards interest as
an agio, or premium, found by contrasting the positive income
 return between B and C with the investment or outgo
between A and B, whereas Professor Clark regards interest
as the ratio between a perpetual, uniform flow of income and
the capital-value of the entire stock. In short, Bohm-Bawerk
 has in mind what we have called in the previous
 chapter the premium concept of interest, and Clark,
the price concept of interest.

§ 10

We have seen that earned income is often only an ideal
standard, and not to be confused with actually realized income.
 Yet the confusion is common. Even Edwin Can-