If we take the money lent to a spendthrift member of the landed gentry, the interest represents not an expansion but a transfer of value. It represents value as congealed labour that is liquidated and turned into revenue. Real wealth is comprised of use values. It is the physical mass and variety of use values that determines a society's capacity to produce and consume. But, these use values are also values. As things that have been produced, they are masses of congealed past labour. As previously discussed, land is not the product of labour, and so has no value. But, the landlord, as owner of the land, is able to appropriate rent. Rent itself is a revenue, and as such a quantity of exchange-value. Its on the basis of this capitalised rent that the price of the land is determined. The landlord, then, as owner of land, is the owner of an asset with a certain exchange-value. In the case of buildings on the land, these are the products of past labour, and thereby have real value. The spendthrift landlord borrows money using these assets as collateral.
Either the interest they pay is met out of the rents they obtain, or else, ultimately, they must sell some of their assets to cover their debts. But, the rent obtained by the landlord is itself a deduction from the surplus profit produced by the capitalist farmer. The interest they pay to the money lender is not a self-expansion of value, but merely a deduction from the existing surplus value produced by the farmer. If the landlord pays the interest by selling part of their estate, then again, this does not represent a self-expansion of value it represents merely a transfer of value from one set of hands (landlord) to another (money lender). Congealed labour (wealth) has been converted into revenue (interest) in the same way that when a business closes down, the value represented by its assets is liquidated, and turned into money for the owner of the business, who uses it not as capital, but as revenue.
Where the money lender lends to a worker, the interest represents a transfer of value rather than an expansion of value. The worker borrows because their income is insufficient to cover their expenditure. But, now, the worker's expenditure is actually increased, because, in addition to the money they must exchange for the commodities they need to reproduce their labour-power, they must now also hand over an additional sum equal to the interest on the money they have borrowed to cover this consumption. Inadequate wages may seem a way of boosting profits, in the short-term, where workers can be persuaded to borrow money to cover the shortfall, or to sell off any assets they have acquired – both of which occurred in the 1990's and early 2000's – but, ultimately, wages must revolve around the value of labour-power, and that means that, ultimately, they must rise so as to cover the additional expenditure, and debt incurred. In other words, that interest must be deducted, indirectly, via these higher wages, from profits.
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