FW: [OPE] market socialism

From: Paul Cockshott (wpc@dcs.gla.ac.uk)
Date: Wed Jul 02 2008 - 16:25:05 EDT

Paul Cockshott
Dept of Computing Science
University of Glasgow
+44 141 330 1629

-----Original Message-----
From: Paul Cockshott
Sent: Wed 7/2/2008 9:00 AM
To: wrighti@acm.org
Subject: RE: [OPE] market socialism
How often does a real rate of interest correspond to this 'natural rate'.
I would submit that the determinants of the real rate have no mechanism to bring it into line with the natural rate.

-----Original Message-----
From: Ian Wright [mailto:iwright@gmail.com] On Behalf Of Ian Wright
Sent: 02 July 2008 00:15
To: Paul Cockshott
Subject: Re: [OPE] market socialism

> The usurer of the past, or the merchant bank of today, was not
> 'postponing consumption', they were and are in the business of lending
> to make money as a business, in order to grow their capital.

Lending at the natural rate of interest by definition does not grow
one's capital.

> The distinction between equity capital and loan capital is relatively
> superficial and indicates a rather anglo saxon perspective on
> capitalism. Outside of the English speaking world, finance capital,
> rather than equity capital has been a characteristic form of ownership
> of large industry. Taken at face value, your argument would suggest
> that the classic German model of capitalism described by Hilferding
> would not be exploitative.

If I lend to you at the natural rate of interest, so you can start a
firm to produce widgets, and you pay me back in 10 years time, then
you've got a business and I have the same claim on the fruits of labour
as I did ten years ago. No exploitation here.

In contrast, if I purchase equity in your widget-firm, and in 10 years
time you've paid back my initial expenditure plus natural interest in
the form of dividends, I still have a claim on your firm's revenue
stream. I will do in-perpetuity as long as I own the shares. In this
case, I am receiving income from other people's work. So this is an
example of exploitation.

Aren't these cases different?

Isn't there an important distinction to be made between:
(i) lending money, and
(ii) having equity-capital in a firm?

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