Chapter Ǵ: Why Subjectivism? ȃȀquestions from its scope. It may be more fruitful to recognize that price
discrimination is indeed going on, with the different labels being used to
separate customers according to their demand elasticities.
Crypticism sometimes accompanies insistence on pure subjectivism.
An example is a line of attack taken against mainstream interest theory,
which enlists considerations of intertemporal transformability (that is, the
productivityof investment) as well as the subjective time-preference ele-
ment. Ļis theory is epitomized by Irving Fisher’s diagram (ȀȈȂǿ/ȀȈȆǿ,
pp. ȁȂȃff.; HirshleiferȀȈȆǿ, passim) showing a transformation curve
between present and future goods (or consumption), as well as a map
of indifference curves between present and future goods. A familiar Aus-
trian objection is to insist that the diagram, specifically the transformation
curve, fails to make the required distinction between physical productivity
and value productivity.
If not deliberate obscurantism, this objection does indicate misun-
derstanding of Fisher’s theory (or impatience with or prejudice against
it). Of course, some technological change that increases the physical
productivity of investment in some specific line of production, say wid-
gets, may not increase the value productivity of such investment. Ļe
increased physical amount of future widgets obtainable for a given present
sacrifice may indeed have a reduced total value relative to other goods
and services in general (the future demand for widgets may be price-
inelastic). Some of the new opportunities created by technological change
will indeed be unattractive to investors. In invoking the greater pro-
ductivity of more roundabout methods of production, Böhm-Bawerk
(Ȁȇȇȃ/ȀȇȇȈ/ȀȈǿȈ–ȀȈȀȁ/ȀȈȄȈ, vol.ŕŕ: pp.ȇȁ–ȇȃ; vol.ŕŕŕ: pp.ȃȄ–Ȅȅ) was refer-
ring to “well-chosen” or “skillfully chosen” or “wisely selected” methods;
and a similar stipulation applies to the present case. Technological changes
that increase the physical productivity of particular roundabout methods
broaden the range of opportunities among which investors can exercise
wise choice, and implementing some of those choices does add to the
demand for waiting, tending to bid up the interest rate.
Ļe ultrasubjectivist objection is open to another strand of reply. It is
illegitimate to invoke a contrast between physical productivity and value
productivity by restricting the discussion to examples of sacrificingspecific
present goods to get more future goods of the same kind. What is con-
veyed by borrowing and lending (and other transactions in waiting) is not
command over investible resources that would otherwise have gone into
producing specific present goods but command over resources in general.