Interest Rates from a Marxian Perspective

[OffYouTrot]

Hello,

Im writting an undergraduate paper on the current trend in low interest rates and wanted to take a marxian approach to it. Is there any discussion on what interest rates signify?

I think David Harvey's idea of the "spatial fix" might be relevant here although it might take a small leap to make it applicable to what I'm writing about. Rosa Luxembourg I imagine would be helpful but I'm a bit reluctant to read "The Accumulation of Capital" at the moment (unless it is very relevant).

Could anyone suggest further reading on this topic?

[ckaihatsu]

Just offhand -- and not from any particularly Marxist / Marxian take on it -- low interest rates indicates a lack of extant interest in utilizing capital for investment and leveraging purposes, as for productive activity (manufacturing), and also r&d / 'innovation'.

The establishment's response to this low interest rate economic environment has been to attempt to supply necessary monetary 'inputs', or liquidity -- despite a lack of 'normal' velocity -- through governmental deficit spending, or 'quantitative easing'.

I've been a bit behind with the news, but fairly recently the Fed had raised the central banking rate a little, but now, from a glance, it looks as though it may have to go back to more propping-up -- which, of course, raises the political question of why public funds are being depended-on by the markets as a longer-term mainstay.

(The explicitly Marxist take would be to say 'Cut out the middleman' and just disburse public funds straight to what they're needed for, for humane purposes.)

[Noa Rodman]

Anwar Shaikh has a chapter (ch.10, preview on googlebooks) dealing with interest rate in his new book Capitalism: Competition, Conflict, Crises.

[swims with the fishes]

when in doubt about marx always go for the rate of profit. interest high-high rate of profit. interest low-low rate of profit.

[YoungChipotle]

when in doubt about marx always go for the rate of profit. interest high-high rate of profit. interest low-low rate of profit.

No, never ever do this. Not only is it an abuse of Marxian economics, its down right wrong. Interest rates are not mediated by rates of profit, either secular or cyclical necessarily.

[cyu]

If you're aiming for a society with no concept of property, interest rates have no place in that society.

What pro-capitalists fear in propertied society is that low interest rates will lead to a glut of cash in the market, resulting in inflation, and de-valuation of the property of those with inheritances and "old money". High interest rates mean less money circulating in society, so less inflation - on the other hand, if businesses can't get loans to operate, people lose jobs and foment revolution.

On one end, capitalism goes out with a whimper. On the other end, capitalism goes out with a bang.

[cyu]

P.S. There is a lot of talk about negative interest rates now - it would actually cost money to keep your money in a bank, or even more ridiculously, possibly cost you money to loan to someone else.

There is some method to the madness. Those in charge of their national economies are running out of dials and levers to tweak. However, it also illustrates just how desperate they've become to try to prop up late-stage capitalism. It is indeed collapsing from its own contradictions around us.

This isn't to say we should let down our guard and communism will spring up by itself. The last time financial crisis went hand-in-hand with communists letting someone else take control, fascism reset capitalism's death clock. Arguably, Reagan and Thatcher marked another attempt by late-stage capitalism to save itself. And here we are again at the end of another cycle - wondering how many more lives the ruling class will throw over the edge to save themselves.

[Comrade-Z]

Hi OffYouTrot,

Interesting idea for a paper! To help clarify your thinking on the issue of interest rates from a Marxist perspective, I recommend reading these following articles from Sam Williams's "Critique of Crisis Theory" blog:

Money as Means of Payment
https://critiqueofcrisistheory.wordpress.com/money-as-a-means-of-payment/

The Rate of Interest and the Profit of Enterprise
https://critiqueofcrisistheory.wordpress.com/the-rate-of-interest-and-the-profit-of-enterprise/

The Phases of the Industrial Cycle
https://critiqueofcrisistheory.wordpress.com/the-phases-of-the-industrial-cycle/
(Be sure to read parts 1-4 of this series).

Of course, I recommend reading all you can of this blog, as it is the best introduction to Marxist economists out there, in my opinion. But these articles should be the most applicable to your topic.

[Blake's Baby]

You might not find Rosa Luxemburg very relevant. Most currents that consider themselves Marxist reject Luxemburg's economic analysis. I would certainly avoid trying to read The Accumulation of Capital if you're on a deadline.

Good luck with your paper.

[cyu]

In the news: http://www.bloomberg.com/news/articles/2016-02-29/japan-may-get-paid-to-borrow-for-10-years-as-yields-below-zero-il8451ti

There is talk among the investment class about some big looming reset coming, and given signs of desperation like this, it really does seem something has to give. Socialism or barbarism, as they say. On the other hand, given the generally sociopathic nature of most pro-capitalists, they tend to just choose barbarism.

[Prof. Oblivion]

What does it even mean to take a "Marxian" view on interest rates? Why do you need to take a "Marxian" view? Why don't you just write about why there are low interest rates?

[Ismail]

What does it even mean to take a "Marxian" view on interest rates? Why do you need to take a "Marxian" view? Why don't you just write about why there are low interest rates?Because he would like to write about interest rates from a Marxian perspective, as opposed to a Keynesian, Monetarist, Austrian, or whatever other perspective associated with bourgeois political economy.

Seems pretty obvious to me. It's like asking "why do you want to write about wages from a Marxian perspective" or "why do you want to write about price controls from a Marxian perspective," as if there's one single view of these things that runs the gamut of economists.

[cyu]

Agreed. There are people who study economics for the benefit of the masses. There are people who study economics to make excuses for their paymasters. There are people who study economics using the grant money from wealthy donors. Much of which I wouldn't call "economics" at all, but merely apologetics for the current establishment.

[Prof. Oblivion]

Because he would like to write about interest rates from a Marxian perspective, as opposed to a Keynesian, Monetarist, Austrian, or whatever other perspective associated with bourgeois political economy.

Seems pretty obvious to me. It's like asking "why do you want to write about wages from a Marxian perspective" or "why do you want to write about price controls from a Marxian perspective," as if there's one single view of these things that runs the gamut of economists.

Interest rates are low because the Fed set them there, due to a lack of inflation and growth in the economy. There's no "perspective" on this, it's just a fact.

[cyu]

They claim it's due to lack of inflation and growth - that is a perspective given by the establishment. Everything the Fed does is just to try to keep their own asses covered. They can't let too many rich people lose their fortunes, since that's their main constituency. They also can't let main street fall too far down the gutter, since that leads to revolution. It is the voice of the status quo - or whatever they can manage to salvage, despite the Titanic springing leaks on all decks.