[OPE-L:2347] Re: interest

Chai-on Lee (conlee@chonnam.chonnam.ac.kr)
Fri, 24 May 1996 01:12:32 -0700

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Duncan wrote in [2330] in responce to Paul;
>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.


I wonder why long-term interest rates is influenced more by
speculation. IMO, speculation is also influential in the determination of
the short-term interest. Maybe you miswrote. I would read it as
long-term interest rates, which seem to be influenced more by "profit
rate" (not speculation). If I am wrong, could you please explain it more?