[OPE-L:7376] [OPE-L:906] Re: Re: interest and accumulation

Thu, 15 Apr 1999 10:02:10 +0100

At 05:07 PM 14-04-99 -0400, you wrote:
>Paul C wrote in [OPE-L:893]:
>> My argument was that the rate of interest indirectly sets a floor
>> to the rate of exploitation. In setting a floor I was only arguing
>> that a rise in the rate of interest cuts back accumulation and causes
>> unemployment.
>Suppose the economy is experiencing a robust expansion when the rate of
>interest increases. If aggregate demand is growing enough and if
>expectations of profitability are very positive, then the increase in the
>rate of interest may not necessarily cause a decrease in accumulation and
>an increase in unemployment.
Then the bank will raise the interest rate further until it does.

>I had previously written:
>> >I think we have to remember not to assume Say's Law when considering the
>> >effects of state monetary policy (or at other times as well).
>To which Paul replied:
>> Taken as self evident.
>It seems to me that the argument that increasing interest rates will
>necessarily lead to a decrease in accumulation and a rise in unemployment
>implicitly assumes Say's Law. E.g. in your argument, there is no
>place for whether changes in aggregate demand will impact whether
>increases in the rate of interest will necessarily lead to decreasing
>accumulation & rising unemployment.
Says law not assumed. Interest rate changes aggregate demand itself.
Paul Cockshott