Externalization of the Relations of Capital in the Form of Interest-Bearing Capital
“The relations of capital assume their most externalised and most fetish-like form in interest-bearing capital. We have here M — M', money creating more money, self-expanding value, without the process that effectuates these two extremes. In merchant's capital, M — C — M', there is at least the general form of the capitalistic movement, although it confines itself solely to the sphere of circulation, so that profit appears merely as profit derived from alienation; but it is at least seen to be the product of a social relation, not the product of a mere thing.” (p 391)
Interest-bearing capital presents the illusion that this thing – capital – can simply increase in value, as a result of its own characteristics. In a sense, this is the same way that orthodox economics sees the value of all commodities stemming from their characteristics, from their utility for each individual consumer. Here, its not the fact that labour produces a social surplus, that takes the form of a surplus value, which can then be divided up, as a result of particular social relations, that explains the expansion of the capital, but seems simply to be the characteristic of money-capital that it produces interest.
It appears that money can simply be lent and as a consequence returns in expanded form, with interest. But, this does not explain where this interest comes from. It seems to be simply a characteristic of capital, just as much as sweetness is a characteristic of sugar. However, its clear that capital, in any form, cannot simply increase in value. A sum of money put in a box and buried in the ground, will not have increased one jot, when it is dug up again, no matter how much its owner has abstained from consumption, risked it being destroyed, or any other of the grounds for compensating.
Similarly, if I lend money to X, who simply uses the money to fund their consumption, because they have no or inadequate income, to sustain themselves, the chances are that X may not repay the capital itself, let alone an amount of interest on it. That is why Pay Day lenders charge such extortionate rates of interest, so that they cover the number of loans that default. Its why countries, like Greece, faced higher interest rates, in order to borrow.
Greece, X or any other borrower, can only repay the capital sum borrowed, plus an amount of interest, in addition, if they are able to produce an amount of surplus value, out of which to fund the interest payments.
For a worker, their wages ultimately equal the value of their labour-power, i.e. the sum total of the value of the commodities they need to consume to reproduce their labour-power. So, they produce no surplus value for themselves. Their labour-power is not capital, but only a commodity sold at its value. So, ultimately, it is impossible for workers to pay interest, unless it results in them having insufficient income to reproduce their labour-power. If their wages remain below the value of their labour-power, for any sustained period, therefore, and they maintain their consumption via borrowing, the interest payments, on that borrowing, must be recovered later, in higher wages than simply required to cover the value of their labour-power, and so constitute a deduction from the profit of enterprise.
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