Capital III, Chapter 36 - Part 3

In pre-capitalist societies, usury takes two forms. Lending to the extravagant members of the ruling class, who live beyond their means, and lending to small peasant producers. Both these types of lending also occur under capitalism, but have a different nature because, under capitalism, usurers capital, or financial capital, is subordinate to industrial capital. Its main function is to provide the loan capital required by industrial capital, the interest rate is determined by that requirement and interest becomes merely a share of the surplus value produced by that industrial capital.

As described previously,

“Both the ruin of rich landowners through usury and the impoverishment of the small producers lead to the formation and concentration of large amounts of money-capital. But to what extent this process does away with the old mode of production, as happened in modern Europe, and whether it puts the capitalist mode of production in its stead, depends entirely upon the stage of historical development and the attendant circumstances.” (p 594)

Under capitalism, the worker does not borrow money as a producer, as a small peasant would have done. They borrow only to finance consumption. Marx quotes the borrowing from the pawnshop, and today would be added the pay day lender, loan shark, credit card provider and so on to cover every day consumption, as well as the mortgage provider for the longer term consumption of housing.

Because the worker borrows money to finance consumption, the interest they pay to the money-lender cannot be a share in any expansion of capital, resulting from the expenditure of that money by the worker. It was spent for consumption not advanced as capital, so could not expand its value. But, the labourer or small peasant producer who does own their own means of production, when they borrow money, to advance as productive-capital, does stand in a relation to the money lender as usurer's capital. The interest they pay is a share of any surplus product, or surplus value that arises from the advance of that productive-capital.

The peasant producer, who expends the equivalent of 100 hours of labour for seeds to produce potatoes and expends 200 hours of their own labour-time, in their production, does not produce surplus value in the way that a capitalist does. The capitalist advances 100 hours of value for seeds, 100 hours for labour-power, and obtains back 300 hours of value from the sale of the potatoes – 100 hours of value more than they advanced.

The peasant producer advances 300 hours of value, and obtains back the same 300 hours of value from the sale of their potatoes. The peasant producer creates a surplus product, in the sense that they produced more potatoes than they required for their own subsistence, and when they sold this surplus product, it assumes the form of a surplus value. They only required the expenditure of 100 hours in production to meet their needs, not the 200 expended. The production of this additional 100 hours, was therefore, a surplus product, and its value only thereby a surplus value.

If the peasant borrowed the money to buy the seeds, rather than providing them out of their own production, then the interest they pay the usurer is a deduction from the “surplus value”.

“Moreover, the usury which sucks dry the small producer goes hand in hand with the usury which sucks dry the rich owner of a large estate. As soon as the usury of the Roman patricians had completely ruined the Roman plebeians, the small peasants, this form of exploitation came to an end and a pure slave economy replaced the small-peasant economy.” (p 595)

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