Division of Profit. Rate of Interest. Natural Rate of Interest.
Marx begins by reminding us that his analysis, in Capital, is not an analysis of competition. He intended an analysis of competition at a later date, as part of his overall plan. It is impossible to analyse capital without analysing the role of competition. For example, its impossible to understand the mechanism for the process of development of a general rate of profit, without understanding how competition causes market prices to fall below exchange values, where the rate of profit is above the average, but this requires only an acknowledgement of this role, rather than a detailed examination of competition and its effects.
Similarly, its impossible, as Marx says, to understand the industrial cycle without an analysis of competition.
“The circuit described by the rate of interest during the industrial cycle requires for its presentation the analysis of this cycle itself, but this likewise cannot be given here. The same applies to the greater or lesser approximate equalisation of the rate of interest in the world-market.” (p 358)
All of these things were to have been part of his greater intended work. For now, his analysis is concerned with the underlying mechanisms of capital, of which these other phenomena are superficial reflections. In this chapter, he is concerned with the analysis of interest-bearing capital, as an independent form of capital, and of interest as a separate form of revenue from profit.
As stated earlier, because capital, as a commodity, is a use value that has no value, it has no locus of market value, around which the market price revolves. But, the range of interest rates, that are generally possible, is effectively limited, because at the one end, an interest rate that is too high would reduce profit to zero, and one that was zero would give no reason for the owners of money-capital to lend. It should be pointed out that the interest rate being discussed here is an average market rate of interest. The rate of interest, in particular instances, will always vary above or below this rate, for the same reason that Marx describes about different rates of interest on the world market. That is that different borrowers may be more or less likely to repay the loan, and so lenders will require more or less compensation for those different degrees of risk.
As was stated previously, under other modes of production, even the upper limit, set by the amount of profit, out of which interest could be paid, presented no constraint. Whenever the amount of interest to be paid is greater than the mass of profit, this is only possible by a diminution of the capital itself, i.e. converting capital into revenue. This may be the case for individual capitals, particularly because those capitals that face the highest individual rates of interest will do so, because they represent the highest risk, because of making lower than average profits.
It may occasionally be the case generally, but only as an exception, because, as soon as industrial capital becomes dominant, by definition, money-capital is subordinated to its interests. Industrial capital could not survive, if money-capital was able to drain too large a portion of interest from it.
“Since interest is merely a part of profit paid, according to our earlier assumption, by the industrial capitalist to the money-capitalist, the maximum limit of interest is the profit itself, in which case the portion pocketed by the productive capitalist would = 0. Aside from exceptional cases, in which interest might actually be larger than profit, but then could not be paid out of the profit, one might consider as the maximum limit of interest the total profit minus the portion (to be subsequently analysed) which resolves itself into wages of superintendence. The minimum limit of interest is altogether indeterminable. It may fall to any low. Yet in that case there will always be counteracting influences to raise it again above this relative minimum.” (p 358)
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