But, its clear that this perceived role of share ownership, in each of these forms, has no validity. In a worker cooperative, for example, the money put up by each worker is always likely to be only a tiny fraction of the money-capital required. The worker cooperative, as with any other capital, will, usually, need to borrow money-capital from a bank, or directly in the money markets, by the issue of bonds, for example. Yet, the loaning of money in any of these other forms – from the bank, or the buyers of bonds – does not give the bank nor bondholders any legal right to exercise control over the cooperative.
Nor should it. The lender of money is the owner of that money, and so entitled to exercise control only over it. They do so by voluntarily surrendering possession of that money, for a specified period, and on specific terms. For example, they agree to lend the money for, say, 5 years, and, in return, for a given rate of interest, which may be fixed or variable, and so on. But, surrendering possession of the money means exactly that. The borrower becomes the possessor of that money – not its owner – for a specified time, and buys things with it. They pay a price for this temporary possession of the money, and that price is the market rate of interest. As Marx sets out, what they have actually borrowed is not money, but money-capital.
Money can have no price, contrary to the claims of bourgeois economics, however much they try to dress it up with concepts of time-preference and so on. But, Marx explains, loanable-money-capital, can have a price, precisely because, of the nature of capital, as self expanding value. The value of capital, is that, once employed, its use-value is to be greater at the end of its circuit than it was at the start. It is this use-value of capital – not as a thing, i.e. not as machines, materials, or labour-power (commodities) – as a social relation, that has a price, precisely because those that do not own it, are prepared, and are able, to buy it, in order to employ it, so as to obtain the average industrial profit, by doing so. As Marx notes, in Capital III, it is the division of capital into these two different forms – interest-bearing capital, and industrial capital – each antagonistic to the other, and of the owners of these two different forms of capital, that makes possible the category of interest, and determines the rate of interest.
The owners of interest-bearing capital lend money-capital to industrial capitalists, who buy things with it. The commodities they buy – machines, material etc. (constant capital), as well as labour-power (variable-capital) – they not only possess, but own. They buy these commodities, precisely in order to utilise them as capital, to obtain, thereby, the average industrial profit. It is only the potential to obtain this average industrial profit that makes borrowing the money-capital worthwhile, but, also, which makes possible the payment of interest to the lenders of that money-capital.
If I borrow money, and just put it in a box, buried in the ground, at the end of the loan period, it will not have become any more money, whatever the basis of my time-preference. Similarly, if I spend the money on the purchase of commodities for my personal consumption, it will not have expanded in value, whatever my time preference. In the former case I at least have the initial capital sum that I can repay, and only have to find a way of obtaining money from elsewhere, to pay the interest. In the latter, having consumed unproductively the commodities I bought with the money, I now have to find money to repay both the initial capital sum, and the interest. There is no objective basis for assuming either is possible.
Money cannot have have two different values. It cannot have a price – interest – based on a difference in those values. But, as Marx describes, capital, as a social relation, does have two different values, precisely because it is self-expanding value. Its value at the end of the circuit of industrial capital, is greater than it was at the start of the circuit. It is greater by the amount of average industrial profit, whose basis is the surplus-value created in the production process. Interest is not a price of money, but of money-capital. It is a deduction from profit, just as is rent and taxes.
It is not the lender of money-capital – be they a bank, bondholder, or shareholder – that is the owner of the industrial capital, bought with the money-capital they loaned, but the industrial capitalist. The loaned money-capital, might appear to be itself, capital, and to self-expand, by the amount of interest, but it is not. It is Marx explains, simply fictitious-capital. It has no real existence, as capital, separate from the same money-capital, borrowed by the industrial capitalist, and used as industrial capital to produce profit. The industrial capitalist, as the owner of that industrial capital appropriates the profit, and only out of it, then, pays interest to the owner of the money-capital they borrowed. The lender of money-capital has no such right of ownership or control. It is not their industrial capital, and not their industrial profit.
When, a bank lends money to someone to buy a house or a car, the bank has no ownership of the house or car, no right to tell the borrower how to use the house or car, and so on. They only have a right to the return of the money at the end of the loan period, and to be paid the agreed interest on the loan. The interest, is not a price for money, in this case either, but the same price of money-capital, the price the lender could have obtained had they loaned the money to be used as money-capital to an industrial capitalist.
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