The only way that the money can return to me with a surplus value – interest- is if the borrower themselves creates new value in a greater quantity than is required to repay the capital.
“But what money in the hands of the lender does not do, it does in the hands of the borrower who really employs it as capital. It performs its real movement as capital in the hands of the borrower. It returns to him as money plus profit, money plus 1/x money.” (p 524)
In other words, whilst, for the money lender, the circuit of their capital appears to be M – M`, so that money appears to have this magical property of becoming a greater sum of money, simply by the passage of time, the real circuit is M – M – C … P … C` - M` – Mi. Its for this reason that interest-bearing capital is not real capital, but is fictitious capital. It is not capable of independent self-expansion of value. The relation between the lender and borrower, expressed at one end of this circuit as M – M, and at the other by M` – Mi, lies outside the circuit of industrial capital. The money loaned by the money-lender, M, is the same money that the borrower metamorphoses into productive-capital, M – C … P. It simply acts twice. The money loaned by the money lender does not act as independent self-expanding value, and then, having been loaned to the borrower, act as an additional amount of capital, which also, thereby, expands. The proof of that is to look at a situation where a lender lends £1,000 at 5% interest to a capitalist who uses it to buy productive-capital. The industrial capitalist will only borrow the money if they believe that the average rate of profit is, say, 10%. That means that, having advanced productive-capital of £1,000, they make £100 profit. From that they are able to pay £50 of interest, and retain £50 of industrial profit.
If we assume, for simplicity, that commodities exchange at their exchange-values, rather than prices of production, the £1,000 of productive-capital advanced self-expands by 10% or £100. The basis of this self-expansion is the fact that, say, £500 was advanced for labour-power, and, with a 20% rate of surplus value, this labour created £600 of new value, resulting in a surplus value of £100. It is the advance of this £500 of variable-capital that is the basis of the £100 of surplus value, and it is the £1,000 of productive-capital that is the source of the £100 self-expansion of the capital. The relation between lender and borrower plays no part in this process. The lender, however, wants their £50 of interest either way. Suppose that, for whatever reason, the £100 of surplus value is not produced. The industrial capitalist only manages to sell their output for £1,000, or maybe wages rise to £600, so that although the output is sold for £1,100, no profit is made. But, the money lender will still want their £50 of interest. The money-capital they loaned did not somehow expand, creating £50 of additional value, embodied in the output, which flows back to them. Instead, the industrial capitalist must now pay £50 of interest to the money lender. This is not an expansion of value, out of which interest is paid, but merely a transfer of existing value from the hands of the industrial capitalist to the hands of the money capitalist.
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