Interest-Bearing
Capital
Capital Volume 3, Part 5, Division of Profit into
Interest and Profit of Enterprise. Interest-Bearing Capital.
This is a long part of Volume
3 and really too much with its sixteen chapters (21 – 36), almost a book in
itself, to be covered in a single discussion. Therefore let us concentrate as
before on the question of whether Volume 1 of Capital is undermined or over-ruled
by Volume 3.
Marx makes it clear that this
is not the case at the beginning of Chapter 23 where he writes:
“Interest, as we have seen
in the two preceding chapters, appears originally, is originally, and remains in fact merely a portion of the profit, i.e.,
of the surplus-value,
which the functioning capitalist, industrialist or merchant has to pay to the
owner and lender of money-capital whenever he uses loaned capital instead of
his own.”
These pages contain great good sense and a lot of assistance to
people trying to make sense of the “Global Economic Meltdown” that has been
going on since 2008, now generally referred to as “the crisis”. As an example,
here are some paragraphs from our sample Chapter
29, Component Parts of Bank Capital, (download linked below).
“We shall now consider
labour-power in contrast to the capital of the national debt, where a negative
quantity appears as capital — just as interest-bearing capital, in general, is
the fountainhead of all manner of insane
forms, so that debts, for instance, can appear to the banker as
commodities. Wages are conceived here as interest, and therefore labour-power
as the capital yielding this interest. For example, if the wage for one year
amounts to £50 and the rate of interest is 5%, the annual labour-power is equal
to a capital of £1,000. The insanity of the capitalist mode of conception
reaches its climax here, for instead of explaining the expansion of capital on
the basis of the exploitation of labour-power, the matter is reversed and the
productivity of labour power is explained by attributing this mystical quality
of interest-bearing capital to labour-power itself. In the second half of the
17th century, this used to be a favourite conception (for example, of Petty),
but it is used even nowadays in all seriousness by some vulgar economists and
more particularly by some German statisticians.[1] Unfortunately two
disagreeably frustrating facts mar this thoughtless conception. In the first
place, the labourer must work in order to obtain this interest. In the second
place, he cannot transform the capital-value of his labour-power into cash by
transferring it. Rather, the annual value of his labour-power is equal to his
average annual wage, and what he has to give the buyer in return through his
labour is this same value plus a surplus-value, i.e., the increment added by his
labour. In a slave society, the labourer has a capital-value, namely, his
purchase price. And when he is hired out, the hirer must pay, in the first
place, the interest on this purchase price, and, in addition, replace the
annual wear and tear on the capital.
“The formation of a
fictitious capital is called capitalisation. Every periodic income is
capitalised by calculating it on the basis of the average rate of interest, as
an income which would be realised by a capital loaned at this rate of interest.
For example, if the annual income is £100 and the rate of interest 5%, then the
£100 would represent the annual interest on £2,000, and the £2,000 is regarded
as the capital-value of the legal title of ownership on the £100 annually. For
the person who buys this title of ownership, the annual income of £100
represents indeed the interest on his capital invested at 5%. All connection
with the actual expansion process of capital is thus completely lost, and the conception of capital as something with
automatic self-expansion properties is thereby strengthened.
“Even when the promissory
note — the security — does not represent a
purely fictitious capital, as it does in the case of state debts, the capital-value of such paper is
nevertheless wholly illusory. We have
previously seen in what manner the credit system creates associated capital.
The paper serves as title of ownership which represents this capital. The
stocks of railways, mines, navigation companies, and the like, represent actual
capital, namely, the capital invested and functioning in such enterprises, or
the amount of money advanced by the stockholders for the purpose of being used
as capital in such enterprises. This does not preclude the possibility that
these may represent pure swindle. But this capital does not exist twice, once
as the capital-value of titles of ownership (stocks) on the one hand and on the
other hand as the actual capital invested, or to be invested, in those
enterprises. It exists only in the latter form, and a share of stock is merely
a title of ownership to a corresponding portion of the surplus-value to be
realised by it. A may sell this title to B, and B may sell it to C. These
transactions do not alter anything in the nature of the problem. A or B then
has his title in the form of capital, but C has transformed his capital into a
mere title of ownership to the anticipated surplus-value from the stock
capital.”
It remains the case that in
Volume 3, Karl Marx is constantly referring back to Volume 1, and reminding us
that whatever “financial” profits (as we would now call them) there may be,
these are only portions of the surplus value generated at the point of
production by the capitalistic exploitation of living labour-power.
Picture: Max
Keiser, of Russia Today’s “Keiser Report” television programme, in a London taxi. Keiser is
particularly eloquent about the role of “fictitious capital” in present
conditions, which appear not to have changed at all from the time of Karl Marx.
Please download and read this text:
No comments:
Post a Comment