Tuesday, 12 January 2016

Capital III, Chapter 23 - Part 1

Interest and Profit of Enterprise

If the industrial capitalist uses their own capital, rather than borrowed capital, then clearly they do not pay interest on it, and all of their profit accrues to them, because interest payments are a deduction from it.

“This alone shows that the category of interest — impossible without determining the rate of interest — is alien to the movements of industrial capital as such.” (p 370)

As was seen previously, the division of the new value created by labour into surplus value and wages, represents the qualitative difference between labour and capital, and the antagonistic interests of both. The greater the share of the new value paid as wages means the smaller the share of surplus value and vice versa.

Where private capitalists club together to form a partnership, to conduct business, they each take a share of the profit, and to that extent, the larger the share of one the smaller the share of the others. But, this does not reflect any qualitative difference between the partners, in the way the division between capital and labour does. Each of the partners is qualitatively the same – an industrial capitalist. Each has the same interest of maximising the surplus value.

There is only a quantitative difference between the partners, i.e. each may receive a different portion of the surplus value based usually on the proportion of the capital they have provided. There is similarly, only a quantitative difference between the share of the surplus value that goes to the profit of enterprise accruing to the industrial capitalist, and that which goes as interest to the money-capitalist. Both recipients are representatives of capital. But, the share that goes as interest to the money-capitalist, is qualitatively different to the share that goes to the partners of a business. Unless money-capital existed as a separate form of capital, then the category of interest itself could not exist, witnessed by the fact that the industrial capitalist that operates with their own capital pays no interest.

Moreover, where the share of the surplus value accrued by each partner in a firm is a reflection of the capital they have contributed, this is not the case with interest. The amount of interest paid for the same amount of loaned capital can move up or down from day to day, because it is a function of supply and demand.

“It is indeed only the separation of capitalists into money-capitalists and industrial capitalists that transforms a portion of the profit into interest, that generally creates the category of interest; and it is only the competition between these two kinds of capitalists which creates the rate of interest.” (p 370)

What is then only a quantitative difference in the division of surplus value between profit of enterprise and interest, becomes a qualitative division between the interests of money-capital and productive-capital.

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