But interest-bearing capital is not truly self-expanding capital. It may appear as self-expanding value to its owner, but it has no independent power of self-expansion. The expansion, equal to the amount of interest, is only a transfer of value from elsewhere. If A lends £100 to B, and obtains £110 back from B, including £10 of interest, B has transferred £10 of value previously in their hands to A. If B used the £100 to buy food with a value of £100, which they consumed, they have not in this process created any additional value. There has been no increase in value, and no self-expansion of value.
Of course, all new value is the product of labour, and all expansions of value arise only from the production of surplus value. The self-expansion of value, is really an expansion of a given amount of advanced value, as a consequence of the performance of surplus labour. From the perspective of the labourer, it is not a self-expansion of value, but only an increase in value resulting from their performance of this surplus labour, i.e. labour beyond that required to reproduce the value of their labour-power. In previous modes of production, the independent labourer, still performed this surplus labour, and, thereby produced surplus value, but it was not a surplus value that came to them gratis, but only as the concomitant of the amount of labour they performed. The commodities they produced contained this surplus value, as an integral element of their value.
But, in the previous modes of production this surplus value is drained from the producers as a consequence of unequal exchange. The medieval peasant provides this surplus value to the landlord by performing labour on the landlord's land as Labour Rent, or provides an equal amount of surplus value, by the payment of Rent in Kind, or ultimately Money Rent. This is unequal exchange, because the peasant obtains nothing in exchange for the value they hand over to the landlord. It is a transfer of value from the hands of the peasant to that of the landlord. Similarly, if the peasant or independent labourer is led to have to borrow money, the money-lender charges them an amount of interest. It is again an unequal exchange, representing a transfer of value from the hands of the peasant or independent labourer to that of the money-lender.
Indeed, the money-lender lends to the landlord too, and obtains interest. The landlord, in so far as they have appropriated surplus value from the peasant, then hands over a portion of this surplus value to the money-lender. The interest is then no more a creation of new value, a self-expansion of value than was the rent obtained by the landlord. It is simply a transfer of value from one set of hands to another. And, where the landlord's revenues from rent no longer suffice to cover their spending, and payment of interest, the landlord must themselves use their estates as collateral for this borrowing which is just the preliminary to this property and the value it represents, passing out of their hands into that of the money-lender, just as the debts of the peasant and independent producer were the preliminary to them becoming debt slaves, and deprived of their own small scale property.
By contrast, with capitalist production, the wage labourer undertakes not unequal exchange, but exchange of commodities on an equal basis. They sell their labour-power to capital at its value, and obtain a wage in return for it. The capital advanced by the capitalist is truly self-expanding value, because despite undertaking this exchange of equals, it results in a greater quantity of value at the end of the process than existed at the start of it. The surplus value of the capitalist exists not because of unequal exchange, as is the case with rent, interest, or the profits of the merchant, but as a result of an exchange of equals. The surplus value arises not because of this exchange, but as a result of the production of new value, a new value greater than the value of the labour-power that produced it.
Capital, as productive-capital is always truly self-expanding value, because, taking the economy as a whole, a greater sum of value exists at the end of a period than existed at the start of it, and this is equal to the expansion of value. This is not true for commercial capital or for interest bearing capital. If only two merchants exist who exchange commodities between them, because neither create new value, they also create no surplus value, or self expansion of value. If A cheats B, by selling them commodities above their value, then A's gain is equalled by B's loss, and vice versa. And, if A is a money lender who lends B £100, and gets back £110, including £10 of interest, this does not represent an increase in value, for society, only a transfer of £10 of value from B to A.
But, when a productive-capitalist employs a wage labourer, and pays them £100 in wages, equal to the value of their labour-power, this represents an exchange of equal amounts of value. The capitalist buys this commodity labour-power in order to utilise its specific use value of creating new value. The capitalist sets the worker to work for a week, and in this week, the worker produces £200 of new value, so that a self-expansion of value has occurred, and the capitalist now has £100 of value more than they had at the start of the week, without giving anything in exchange for it. The capital has self expanded.
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