[OPE-L:1022] Re: Pure and Normal

Gilbert Skillman (gskillman@mail.wesleyan.edu)
Fri, 9 Feb 1996 10:31:09 -0800

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Concerning the question of treating the interest rate as the price of
money understood as a commodity, Paul responds:

> I regard calling interest payments the price of money both
> irrational and confusing.

To be slightly more precise, it's the price of money acting in its
role of capital. Here I simply follow Marx:

"In this capacity of potential capital, as a means to the production
of profit, [money] becomes a commodity, but a commodity of a special
kind. Or what comes to the same thing, capital becomes a commodity."
[III, pp. 459-60].

"The form of lending results from capital's characteristic here of
emerging as a commodity, or in other words, it results from the fact
that money as capital becomes a commodity." [III, pp 462-63]

This commodity has a price:

"The use-value of moeny lent out is its capacity to function as
capital and as such to produce the average profit under average
conditions. What then does the industrial capitalist pay, i.e. what
is the price of the capital lent out?" (p. 474)

Although it's an "irrational" price, not based on underlying value
[which is precisely my point--that's how it allows appropriation fo
surplus value]:

"If interest is spoken of as the price of money capital, this is an
irrational form of price, in complete contradiction with the concept
of the price of a commodity. Here, price is...simply a particular sum
of money that is paid for something which somehow or other figures as
a use-value; whereas in its concept, price is the value of this
use-value expressed in money." (p. 475)

In particular, interest is a price in the standard sense that its
prevailing level is determined by supply and demand:

"It is different, though, with interest on money capital. Here
competition does not determine divergences from the law, for there
*is* no law of distribution other than that dictated by
competition;...What is called the natural rate of interest simply
means the rate established by free competition." (p. 475)

For my part, I consider it confusing and irrational *not* to consider
interest a price in the sense spelled out by Marx. But I realize
there are still theoretical issues to be hashed out here.

Paul continues:

> On the other hand I think that Gil is justified in saying that
> in certain circumstances, that of the putting out system, capital
> can be accumulated on the basis of producers selling their output
> at below its value. Is this, however, any different from the secondary
> form of profit that exists in capitalism in general whereby
> the retail trade obtains its profit by purchasing goods at below
> their value?

Yes, there is a difference that makes all the difference: in
proto-industrial forms such as the putting-out system, the circuit of
merchant's capital supports and appropriates the creation of new
value, i.e. surplus value. Marx clearly recognizes the distinction
between the two cases of pure redistribution and appropriation of
surplus value:

"[The merchant's] gain---the surplus value created for him the value
he has brought into the exchange--thus appears to stem exclusively
from circulation and hence only to be made up of the losses of the
people trading with him. Merchant wealth can in fact originate
purely in this manner...But if the gain made by the merchant, or the
self-valorization of the merchant's wealth, is not merely to be
explained by his taking advantage of the commodity owners; *if,
therefore, it is to be more than just a different distribution of
previously existing sums of value*, it must evidently be derived only
from prerequisites which do not appear in its movement, in its
specific function, and its gain, its self-valorization, appears as a
purely derivative, secondary form, the origin of which must be sought
elsewhere." [Collected Works, V. 30, p. 30; emphasis added]

Which is to reiterate Marx's point from Vol I, ch. 5, to the effect
that surplus value must be *produced*, i.e. must originate from
outside of circulation. But this need not involve the *capitalist*
mode of production: Marx repeatedly affirms that merchant's capital
appropriates surplus labor in this alternative guise. For example,

"[Mr. Carey] ought to have compared the interest which English
handloom-weavers...pay, whose material and instrument is advanced
(lent) by the capitalist. He would have found that the interest is
here so high that, after settlement of all items, the worker ends up
being the debtor, after not only having made restitution of the
capitalist's advance, *but also having added his own labour to it
free of charge*." [Grundrisse, pp 851-852; emphasis added]

My overarching point is that all of these claims are perfectly
comprehensible in the context of Marx's historical-strategic account
(but not his value-theoretic account) of capitalist exploitation.

In solidarity, Gil Skillman