I may be a bit rusty on this, but I thought loanable funds theory referred
to the supply and demand for loan capital, not savings and investment. To
cover my butt in my original posting I deliberately said LF or liquidity
so as not to take a side on that hoary controversy. I also used the term
"rentiers" rather loosely (but contemptuously) to refer to a class of
people who hold or manage capital in money form. They are not the passive
coupon clippers of old, but extremely active & hard working (if
unproductive) folks like pension fund managers and insurance company
executives. The degree to which they serve industrial capital is highly
debatable, given that industrial capital is overwhelmingly self-financing,
especially the larger units, and the (post-)modern rentiers only care
about increasing their money returns. How much of the $1 trillion a day
that passes through the CHIPS wire becomes capital in Marx's sense, that
of engaging living labor?
Doug
Doug Henwood [[EMAIL PROTECTED]]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)
On Thu, 24 Feb 1994 [EMAIL PROTECTED] wrote:
> Loanable Funds and rentiers don't strike me as useful concepts
> for understanding interest rate determination. Loanable funds
> theory assumes that interest rates equilibrate investments and
> savings. As such, it has nothing to do with Marx and is logically
> inconsistent because of re-switching and reverse capital-deepening.
> And why all the talk about rentiers influencing monetary policy?
> There is empirical evidence that the Administration, Congress
> and the large commercial banks influence monetary policy, not
> rentiers. A sell-off in the stock or bond markets would also
> cause the Fed to change course. But the people in the pits and
> at the trading desks aren't rentiers. They embody financial
> capital, which thrives on fees for providing services to
> industrial capital and by maintaining as large a spread as
> possible between the interest rate on deposits and the interest
> rate on loans. Isn't that different from being a rentier?
>
>
