Apropos another matter, Duncan writes:
>... From a Marxian point of view the rate of
>money interest is basically determined by bargains between
>financial capitalists and industrial capitalists over the division of
>surplus value. It seems to me that either in a gold standard system or in
>a state credit system speculation plays a critical role in determining
>money prices...
Let me use this as an opportunity to suggest that the Marxian theory of
interest might be grounds for our joint attention, because this theory needs
work. In Volume III of Capital, Marx says that the interest rate is simply
the product of supply and demand, with no reference to any underlying or
"natural price" conditions:
"If supply and demand [for labour-power] coincide, their effect ceases, and
wages are equal to the value of labour-power. It is different, though, with
interest on money capital. Here competition does not determine divergences
from the law for there *is* no law of distribution other than that dictated
by competition; as we shall go on to see, there is no 'natural' rate of
interest. What is called the natural rate of interest simply means the rate
established by free competition."
But if this is true, it cannot address facts such that the average rate of
return on stocks is consistently higher than the average interest rate.
Given this, why don't more capitalists switch from being mere
interest-capitalists to being industrial-capitalists, until the average
rates of return are equalized?
In solidarity, Gil