He doesn't say interest rates are arbitrary, he says that they're linked to the average rate of profit. He does say that they aren't defined or linked to any process of production.
He also said that interest rates are frequently subject to lots of fraud.
Since we have seen that the rate of profit is inversely proportional to the development of capitalist production, it follows that the higher or lower rate of interest in a country is in the same inverse proportion to the degree of industrial development, at least in so far as the difference in the rate of interest actually expresses the difference in the rates of profit. It shall later develop that this need not always be the case. In this sense it may be said that interest is regulated through profit, or, more precisely, the general rate of profit. And this mode of regulating interest applies even to its average.
In any event the average rate of profit is to be regarded as the ultimate determinant of the maximum limit of interest.
There isn't a natural limit on interest, any individual can charge any other individual whatever they want to in interest (fraud/payday loans), but the rate of interest must be regulated by production and profits else you have collapse and failure of capitalism to reproduce.
Why not? I don't really see anything seriously wrong with his reasoning. Just that it seems to regulate, but not because of any laws of competition or anything innate to capitalist production, more like it's an example of collaboration between members of the industrial capitalist class.
I agree that his use of "lawless" is odd, especially because he very quickly lays out laws and even explains that some interest is necessary. (the part of interest that pays the working entrepreneur the value of their management labor, the part if interest that pays the wages of the workers maintaining the money infrastructure/banks etc.)
He mentions at one point the bookkeepers in Indian communal villages, and how their substance is assured by surplus labor volunteered by the village. You could call their subsistence costs a form of interest on the total productive output of the village. I think the only think that makes interest "lawless" is situations where the lending capitalist decides to raise their interest rates to increase their personal standard of living. They can do this without having to balance out another commodity (labor price in the industrial capitalists books).
The fact that they limit themselves is some form of class collaboration and knowledge that exceeding a certain amount of interest would deprive them of the production needed to reproduce themselves.
That being said, I definitely find Marx's explanations on the subject lacking, even if all the examples he gives work correctly.
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He doesn't say interest rates are arbitrary, he says that they're linked to the average rate of profit. He does say that they aren't defined or linked to any process of production.
He also said that interest rates are frequently subject to lots of fraud.
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Read the next chapter:
There isn't a natural limit on interest, any individual can charge any other individual whatever they want to in interest (fraud/payday loans), but the rate of interest must be regulated by production and profits else you have collapse and failure of capitalism to reproduce.
deleted by creator
Why not? I don't really see anything seriously wrong with his reasoning. Just that it seems to regulate, but not because of any laws of competition or anything innate to capitalist production, more like it's an example of collaboration between members of the industrial capitalist class.
deleted by creator
I agree that his use of "lawless" is odd, especially because he very quickly lays out laws and even explains that some interest is necessary. (the part of interest that pays the working entrepreneur the value of their management labor, the part if interest that pays the wages of the workers maintaining the money infrastructure/banks etc.)
He mentions at one point the bookkeepers in Indian communal villages, and how their substance is assured by surplus labor volunteered by the village. You could call their subsistence costs a form of interest on the total productive output of the village. I think the only think that makes interest "lawless" is situations where the lending capitalist decides to raise their interest rates to increase their personal standard of living. They can do this without having to balance out another commodity (labor price in the industrial capitalists books).
The fact that they limit themselves is some form of class collaboration and knowledge that exceeding a certain amount of interest would deprive them of the production needed to reproduce themselves.
That being said, I definitely find Marx's explanations on the subject lacking, even if all the examples he gives work correctly.