Edwin Dickens asks where Marx and Keynes state that the rate of interest is determined by the balance of supply and demand for loan capital. In Capital, vol. 3, Marx distinguishes between the avarage rate of interest and the market rate of interest. The first refers to the average over the business cycle, and is determined, amongst other things, by the relative strength of industrial and financial capital, institutional factors and even convention. The market rate fluctuates around the average rate according to the state of the business cycle. Flicking through vol. 3, the references I see about supply and demand refer to the second. E.g. 'the relationship between the supply of loan capital on the one hand, and the demand for it on the other, is what determines the market level of interest at any given time.' (Penguin edition, p. 488) 'If the rate of interest rose to a very high level, this was simply becasue the demand for money capital grew still more quickly than the supply ... ' (p. 553) 'Immediately after the crisis ... there is a low rate of interest, which in this case simply indicates an increase in loanable capital' (p. 616). However, in chapters 30-32, where Marx describes in some detail the movement of the market rate over the business cycle, he argues that not only the demand for money capital, but also the supply is related to the state of economic activity. I don't have Keynes to hand. Trevor Evans Paul Lincke Ufer 44 10999 Berlin Tel. & Fax 49 30 612 3951 E-mail [EMAIL PROTECTED]
