Trevor Evans believes that Marx's theory of the interest rate is
more or less "complete." As an example of what this means, Trevor
points to Marx's rejection of a natural rate of interest. Trevor
then speculates that Marx might have a loanable funds type theory
of interest rate determination that would support a crowding
out argument. Trevor, crowding out implies a natural rate theory
of interest rate determination in the sense that it assumes that
the level of the interest rate is determined in the long run by
real factors alone--the essence of natural rate doctrine. So
much for completeness.
Trevor suggests that I reduce Marx's theory to a question of the
relative strengths of industrial and financial capital. Someone
called attention to Van der Pijl's excellent work in this area.
I would be most interested in how they think Van der Pijl's work
applies to interest rate determination. But I don't think Marx
argued that the relative strengths of financial and industrial
capital would determine the interest rate. It is hardly profound
to point out that people who lend money want a high interest rate
while people who borrow money want a low interst rate. To reduce
Marx's theorizing to such nostrums is embarrassing.
I argued that Marx had intuitions about the determinants of the
interest rate that did not pane out when he applied his dialectical
method to them. Rather than trying to construct a complete theory
from the shards of Marx's tentative efforts, which is the dominant
tendency in the extant literature, we are better served by examining
why Marx broke off his analyses at the points where he did, what new
points of departure he tried, where his results were taking him, and
why research in this area kept dropping further and further down Marx's
list of priorities. My point still stands whether or not one interprets
Marx's book on the state as the capstone of his economic writings. But
insofar as I'm concerned, the lack of well-developed links between
his economic writings and his political writings is the fundamental
lacunae in Marx's oeuvre. And to my mind the theory of interest
rate determination is crucial to filling in that lacunae.
Edwin Dickens
