КАПИТАЛ И КАМАТА

КРИТИЧКА ИСТОРИЈА НА ЕКОНОМСКАТА ТЕОРИЈА

Analytical Table of Contents

INTRODUCTION

The Problem of Interest

The phenomenon of an income flowing constantly from all kinds of capital, without personal exertion of the owner

The conditions of solution

The theoretical must be distinguished from the social and political problem. Characteristic of each

Danger of confounding the two; its common effects

Our tasks is the critical history of the theoretical problem

Preliminary definitions. Capital a “complex of produced means of acquisition”

The difference between National and Individual capital

between Gross interest and Net interest

between Natural and Contract (or Loan) interest

Interest as distinguished from Undertaker’s profit

Limitation of the subject to Interest proper

BOOK I

The development of the Problem

Chapter I

The opposition to interest in classical and medieval times

Loan interest, or Usury, as evidently income without labor, was discussed long before Natural interest, where labor is always present, and is supposed to account for the income

The first period – a rather barren one, extending to the eighteenth century – is taken up with the struggle for and against usury

Dislike of interest shown to all undeveloped stages of industry

Hostility of the philosophic writers

Aristotle’s argument, that money does not breed

Thus far the question is only theoretical, interest being recognized as an established institution

Reaction under Christianity; victory of the Church over temporal legislation; prohibition of interest

The subject treated theoretically till twelfth century, when begin appeals to the jus divinum, jus humanum, and jus naturale

The explanation of this; - the vexatious pressure of the prohibition on industry, and the necessity for rational defense of it

Stock argument of this period

(1) The barrenness of money

(2) The consumability of money (Thomas Aquinas)

(3) The Use transferred with the capital

(4) The selling of Time, a good common to all

But the prohibition did not apply to profit made by personal employment of capital

Chapter II

The defense of interest from the sixteenth till the eighteenth century

Zenith of the prohibition in the thirteenth century

The struggle for practical life. Direct exceptions to the prohibition; evasions of it. The “interesse”

The effect on theory. Compromise of the reformers with the “parasitic profit”

Rise of direct opposition to the prohibition

Calvin rejects authority, and dismisses the rational arguments, but does not unreservedly allow interest

Molinaeus; his scholastic review and criticism of the canon arguments; his conclusions and concessions

Calvin and Minaeus, however, stand almost alone in the sixteenth century

Besold an able follower of Molnaeus

Bacon sees in interest an economical necessity, but only tolerates it

In the seventeenth century there is a great development of theory, especially in the mercantile Netherlands. Grotius theoretically condemns interest, but practically allows it. A few years later the tide fairly turns with Salmasius.

Salmasius’s argument; - if the Commodatum is allowable, so also is the Loan. To the objection founded on the perishable nature of goods, he answers: (1) that such an argument would prevent the lending of perishable things even without interest, and (2) that the perishableness is another argument for interest

Character of his writings

His work marks high water for a hundred years

In Germany after the seventeenth century there is not much question about the legitimacy of interest

Justi says nothing about it. Sonnefels, who has nothing good to say of it, ridicules the cannon doctrine and the prohibition

In England the prohibition was removed before the theoretic question emerged. Hence the only debated question was as to legal fixed rates of interest

Thus Culpepper, Child, North

Locke goes deeper into the subject. Money, he admits, is barren, but interest is justified; for, owing to bad distribution, one has lands which he cannot use, and another has capital, and interest for the one is as far as rent for the other

Locke’s real importance, however, lies in the idea kept in the background, that all wealth is made by labor. Thus also Steuart

Hume on the connection between profit and interest

By the time of Bentham (1787) the cannon doctrine is only a subject for ridicule

In Italy the legal prohibition was quite inoperative

But before the eighteenth century there appeared no theoretical defense of interest

Galiani’s pregnant idea (1750). From the analogy of bills of exchange, he argues that present sums of similar amount, and that interest represents the difference

But he ascribes this to the different degree of their security, and so makes interest a mere insurance premium

Beccaria. In France legislation and theory held by canon doctrine long after it was abandoned elsewhere. Pothier.

Fanatical opposition by the elder Mirabeau

Finally, Turgot gave the canon doctrine its coup-de-grace. Summary of the Memoire

Critical retrospect. The canon had said that interest was a defrauding of the borrower; for (1) money is barren, and (2) there is no separate use of it. The new doctrine said (1) money is not barren when the owner, employing it himself, can make profit by it, and (2) there is a use of capital separable from capital itself

In short, it explained Loan interest from Natural interest, but did not go on to ask the meaning of Natural interest

All the same it was no small gain that the question was now formally put, Why can a man, employing his own capital, make a profit?

It was not long before a part of employer’s profit was seen to be an income sui generis

Chapter III

Turgot’s Fructification Theory

The reason why Contract interest was first studied

Scientific research now replaced the outside motive. The Economists: Quesnay, De La Riviere

Turgot’s argument – the possession of land guarantees rent. But land may be priced in capital, and so every capital becomes the equivalent in the value of a piece of land. Capital must therefore bare as much profit as lands bears rent; otherwise all forms of industry would be abandoned for agriculture

This, however, is arguing in a circle. Land is priced by discounting its future uses; calculating so many years’ purchase at a customary rate of interest. Rate and interest then are forms of the one phenomenon which we are investigating

Chapter IV

Adam Smith and the Development of a Problem

Adam Smith has no distinctive theory of interest

His principal suggestion – its necessity as an inducement to the productive employment of capital

His contradictory accounts of its origin (1) in an increased value of products over the labor value, (2) in a curtailment of wage

While Adam Smith is thus neutral, these suggestions formed the germs of later theories

The growth of capital and the antagonism of capital and labor soon made neutrality impossible, and compelled discussion of interest as income obtained without work

Hence the appearance of a number of interest theories

Division of the subject. The various interest theories as answers to the central question: Why is Surplus Value a constant phenomenon of capitalist production?

Chapter V

The Colorless Theories

Sartorius, Lueder, Kraus, Hufeland, Seuter, Politz, Murhard, Schmalz, Canerin

Count Soden on interest as diverted from the product of labor.

Lotz makes the capitalist’s sole claim replacement of his expenses; but this would not be sufficient inducement to the productive employment of capital; hence the necessity of interest

Insufficiency of this illustrated from rent

Jakob, Fulda, Eiselen, Rau

Ricardo’s account –

(1) Of the origin of interest – the inducement to productive employment of capital

(2) Of the rate of interest. As a result of his rent theory, profit and wage together are determined by the return to the worst land in cultivation

But wages being determined by the “Iron Law”, profit is the remainder. And as more unfavorable cultivation is resorted to, the decreasing product leaves less to profit

But profit cannot disappear, otherwise accumulation would cease, and wealth and population be checked

In this Ricardo has neglected the constant causes which prevent the absorption of profit by wage;

for the weakening of the motives of accumulation may prevent resort to land which yields too small a profit

(3) Of a connection between profit and value. Profit as paid out of increased price. Inconsistency of this with the “Labor principle”

Torrens, arguing against Malthus, declares profit a surplus, not a cost; but says nothing as to its origin

M’Culloch finds that value is determined by labor alone, capital being only the product of previous labor; includes profit among costs; and at the same time defines profit as a surplus

His absurd illustrations of the cask of wine;

of the two capitals – in leather and wine; of the timber. General untrustworthiness

M’Leod sees no problem; considers profit self-explanatory and necessary

His faith in formula of supply and demand

Garnier. Canard; “necessary” and “superfluous” labor

Possible agreement of Canard with Turgot’s theory

Droz makes saving an element of productive power, but devotes his alienation chiefly to Contract interest

BOOK II

The productivity Theories

Chapter I

The Productive Power of Capital

Apparent simplicity of the new explanation that Capital produces its own interest

Real ambiguity of the word “productive”, as (a) producing more goods, (b) producing more value

…

(EUGEN V. BOHM-BAWERK: “CAPITAL AND INTEREST – A Critical history of Economical Theory”; London, MACMILLAN and co. and New York – 1890)