Praxis

November 18, 2008

Marx on Debt

Filed under: Economics, Marx, NP — duncan @ 5:51 pm

Why is there a social imperative, in capitalism, towards valorisation, accumulation, expansion of markets and production? Here’s a passage from Capital Volume III. Marx is talking about interest rates, and the division of surplus value into interest on capital and profit of enterprise.

[T]his mutual ossification and autonomization of the two parts of the gross profit, as if they derived from two essentially separate sources, must now be fixed for the entire capitalist class and the total capital. Furthermore, this is true irrespective of whether the capital applied by the active capitalist is borrowed or not, or whether or not the money capitalist who owns the capital uses it himself. The profit on any capital, and thus also the average profit based on the equalization of capitals among themselves, breaks down or is divided into two qualitatively different, mutually autonomous and independent parts, interest and profit of enterprise, which are both determined by particular laws. The capitalist who works with his own capital, as well as the one working with borrowed capital, divides his gross profit into interest that accrues to him as owner, as lender of his own capital to himself, and profit of enterprise, which accrues to him as an active, functioning capitalist. It becomes a matter of indifference, as far as this division is concerned, whether the capitalist really does have to share with another or not. The person who applies the capital, even if he works with his own capital, breaks down into two persons, the mere owner of capital and its user

Money that is lent out must be returned to the lender with interest added on – this is the principle of lending. [Though see below.] Another way of saying that: money lent out must be valorised. Now – this doesn’t mean that money lent out will ‘really’ be valorised, through the production of ‘real’ additional value. It doesn’t (contra my macroeconomics textbook) mean that all money lent out must be lent out for investment purposes (still less for successful investment). But the additional value that’s returned to the lender as the price of borrowing has to come from somewhere. For the particular borrower, this additional money could come from, say, reduced consumption at the appropriate time. But just as the capitalist class as a whole can’t make money by individual capitalists thieving off each other, so for the system as a whole interest on borrowing can’t be repaid just by taking money from elsewhere. If the economic system as a whole necessarily involves lending (which it does), then, for the system as a whole, there are only two options (both of which can be (and are) operative at once, of course): 1) default; 2) growth. [Though this ignores changes in price levels, which is really important. Sorry :-(.] I hope I’m more or less right in saying this.

What’s particularly striking about the Volume III passage I quoted, is that here Marx suggests that the logic of lending applies even to capitals that are not in fact lent out – that even the capitalist who invests his own money obeys the capitalist logic of interest and (therefore) valorisation. This is turn suggests that it’s a mistake to give too much emphasis to private property, in our analysis of the capitalist system. One of the things that’s distinctive about capital as a movement of valorisation, Marx suggests, is not private property per se, but rather the interplay between private property and debt, and the entrance of the social logic of debt into some kinds of apparently clear-cut private property.

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1 Comment »

  1. [...]   Timothy Barr, RhetoricianPerhaps Marx's concept of valorisation could be useful: http://prax… (more) Sign up for free to read the full text. Login if you already have an account.Comment [...]

    Pingback by Economics: What are modern examples of a debt free monetary system? - Quora — April 23, 2012 @ 6:06 pm


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