[OPE-L:2330] Re: interest

Duncan K Foley (dkf2@columbia.edu)
Wed, 22 May 1996 19:52:10 -0700

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On Wed, 22 May 1996, Paul Cockshott wrote:
(among other things)

> This is certainly a factor, but since a considerable part of debt
> is state rather than commercial, bargains between financiers and the
> state should be equally relevant. Marx, does not, admitedly, go into
> much detail on this, since he is in vol 3 presenting interest as
> a category internal to capitalist economic relations and thus
> largely abstracting from the state. But I see nothing in his approach
> which would prohibit one from taking state monetary policy into
> account as a determinant of the rate of interest.

These are extremely important questions for macroeconomics and the
understanding of monetary policy. It seems to me that there is a division
between Marx's essentially "loanable funds" theory of the interest rate,
and Keynes' "liquidity preference" theory. Marx sees the interest rate as
linked more to the profit rate (though his remarks about the theoretical
indeterminacy of the interest rate leave room for liquidity factors to
influence the gap between the interest rate and the profit rate. Perhaps
here it is important to distinguish between short-term interest rates,
which seem to be influenced more by monetary policy, and long-term
interest rates, which seem to be influenced more by speculation.