Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 11

Duhring makes the following comment, in relation to Law, a version of which can also be found, today, in the argument of proponent of MMT.

“Law too was obviously never able completely to eradicate the above-named basis” (namely, “the basis of the precious metals”), “but he pushed the note issue to its extreme limit, that is to say, to the collapse of the system”. (p 300)

Engels comments,

“In reality, however, these paper butterflies, mere money tokens, were intended to flutter about among the public, not in order to “eradicate” the basis of the precious metals, but to entice them from the pockets of the public into the depleted treasuries of the state.” (p 300)

That, of course, has been the goal of all states that sought to pay their bills by corrupting the currency, and passing off such devalued tokens at their face value. Marx discussed it in "A Contribution To The Critique Of Political Economy", in relation to the predecessors of Keynes, and the proponents of MMT, the Birmingham Little Shilling Men.

Engels returns to Petty and the further elaboration of these points.

“To return to Petty and the inconspicuous role in the history of economics assigned to him by Herr Dühring. Let us first listen to what we are told about Petty’s immediate successors, Locke and North. Locke’s Considerations on Lowering of Interest and Raising of Money, and North’s Discourses upon Trade, appeared in the same year, 1691.” (p 300)

Engels quotes Duhring's assessment.

“What he” (Locke) “wrote on interest and money does not go beyond the framework of the reflections which were current under the dominion of mercantilism in connection with the events of political life”. (p 300)

Marx deals with North, Locke, Hume, as well as Massie, in Theories of Surplus Value. Locke, in particular, represented the interests of the rising industrial bourgeoisie, as also, for example, set out in his Second Treatise on Government. As Marx sets out, in Capital, so long as restrictions existed on the lending and borrowing of money, it meant that it amounted to usury. Once those restrictions are lifted, it is not only those desperate for money that can borrow, but those who seek to borrow in order to invest in real industrial capital accumulation. When it is only the desperate who borrow, there is no limit to the usurious rates they will pay, especially given the limited number of lenders. But, when restrictions are lifted, whilst the additional demand for money-capital acts to raise interest rates, the fact that industrial capitalists will only borrow if the rate of interest is lower than their anticipated rate of profit, acts to put a cap on it.

Moreover, it is not the supply of currency/money tokens that is relevant, for the reasons set out earlier, in determining the rate of interest, but the supply of money-capital. The main source of new money-capital is realised profits. Other sources are money reserves (savings). So, when industrial capital expands, it produces greater masses of realised profit, and so increases the supply of money-capital, thereby, putting downward pressure on interest rates, as happened, for example, from the 1980's onwards.

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