David B. Shemano wrote:
The logic of interest ultimately goes back to the principle that
human beings would rather consume today then consume tomorrow (i.e.
they value the present more highly than the future). If I offered
you a dollar now, or offered you a dollar next year, would you
think both offers were of equivalent value? If you do, there is
not much to say. If you agree they are different, then you can see
that if I have a dollar, and you ask me to exchange that dollar for
the promise of a dollar next year, it is not an equal exchange.
Interest is what balances the transaction.
Related to this is the question of whether you should consume what
you presently have, or defer present consumption in order to invest
in capital, which will enable you to consume more in the future
than you would if you consumed now and did not invent in capital.
Interest is a price signal that helps to regulate what is presently
consumed as opposed to what is invested for future consumption.
Marx wrote:
Accumulate, accumulate! That is Moses and the prophets! “Industry
furnishes the material which saving accumulates.” Therefore, save,
save, i.e, reconvert the greatest possible portion of surplus-
value, or surplus-product into capital! Accumulation for
accumulation’s sake, production for production’s sake: by this
formula classical economy expressed the historical mission of the
bourgeoisie, and did not for a single instant deceive itself over
the birth-throes of wealth.But what avails lamentation in the face
of historical necessity? If to classical economy, the proletarian
is but a machine for the production of surplus-value; on the other
hand, the capitalist is in its eyes only a machine for the
conversion of this surplus-value into additional capital. Political
Economy takes the historical function of the capitalist in bitter
earnest. In order to charm out of his bosom the awful conflict
between the desire for enjoyment and the chase after riches,
Malthus, about the year 1820, advocated a division of labour, which
assigns to the capitalist actually engaged in production, the
business of accumulating, and to the other sharers in surplus-
value, to the landlords, the place-men, the beneficed clergy, &c.,
the business of spending. It is of the highest importance, he says,
“to keep separate the passion for expenditure and the passion for
accumulation.” [25]
The capitalists having long been good livers and men of the world,
uttered loud cries. What, exclaimed one of their spokesmen, a
disciple of Ricardo, Mr. Malthus preaches high rents, heavy taxes,
&c., so that the pressure of the spur may constantly be kept on the
industrious by unproductive consumers! By all means, production,
production on a constantly increasing scale, runs the shibboleth; but
“production will, by such a process, be far more curbed in than
spurred on. Nor is it quite fair thus to maintain in idleness a
number of persons, only to pinch others, who are likely, from their
characters, if you can force them to work, to work with success.” [26]
Unfair as he finds it to spur on the industrial capitalist, by
depriving his bread of its butter, yet he thinks it necessary to
reduce the labourer’s wages to a minimum "to keep him industrious.”
Nor does he for a moment conceal the fact, that the appropriation
of unpaid labour is the secret of surplus-value.
“Increased demand on the part of the labourers means nothing more
than their willingness to take less of their own product for
themselves, and leave a greater part of it to their employers; and
if it be said, that this begets glut, by lessening consumption” (on
the part of the labourers), “I can only reply that glut is
synonymous with large profits.” [27]
The learned disputation, how the booty pumped out of the labourer
may be divided, with most advantage to accumulation, between the
industrial capitalist and the rich idler, was hushed in face of the
revolution of July. Shortly afterwards, the town proletariat at
Lyons sounded the tocsin of revolution, and the country proletariat
in England began to, set fire to farm-yards and corn-stacks. On
this side of the Channel Owenism began to spread; on the other
side, St. Simonism and Fourierism. The hour of vulgar economy had
struck. Exactly a year before Nassau W. Senior discovered at
Manchester, that the profit (including interest) of capital is the
product of the last hour of the twelve, he had announced to the
world another discovery.
“I substitute,” he proudly says, “for the word capital, considered
as an instrument of production, the word abstinence.”
An unparalleled sample this, of the discoveries of vulgar economy!
It substitutes for an economic category, a sycophantic phrase —
voilà tout.
http://www.marxists.org/archive/marx/works/1867-c1/ch24.htm
Keynes wrote:
Nineteenth century philosophy was wont to assume that the future is
always to be preferred to the present. But modern communities are
more inclined to claim the right to decide for themselves in what
measure they shall subscribe to this austere doctrine. (Collected
Writings, vol. VI p. 280)
the capitalist classes [in the nineteenth century] were allowed to
call the best part of the cake theirs and were theoretically free
to consume it, on the tacit underlying condition that they consumed
very little of it in practice. The duty of 'saving' became nine-
tenths of virtue and the growth of the cake the object of true
religion. There grew round the non-consumption of the cake all
those instincts of puritanism which in other ages has withdrawn
itself from the world and has neglected the arts of production as
well as those of enjoyment. And so the cake increased; but to what
end was not clearly contemplated. Individuals would be exhorted not
so much to abstain as to defer, and to cultivate the pleasures of
security and anticipation. Saving was for old age or for your
children; but this was only in theory -- the virtue of the cake was
that it was never to be consumed, neither by you nor by your
children after you. (Collected Writings, vol. II, p. 12)
the capitalist is disposed to favour a heavy sinking fund, partly
out of his ingrained habits of 'prudence' and of preferring the
possibility of future benefits to the certainty of present ones.
(Collected Writings, vol. XIX, Pt. 2, p. 690)
When the accumulation of wealth is no longer of high social
importance, there will be great changes in the code of morals. We
shall be able to rid ourselves of many of the pseudo-moral
principles which have hag-ridden us for two hundred years, by which
we have exalted some of the most distasteful of human qualities
into the position of the highest virtues. We shall be able to
afford to dare to assess the money-motive at its true value. The
love of money as a possession -as distinguished from the love of
money as a means to the enjoyments and realities of life -will be
recognised for what it is, a somewhat disgusting morbidity, one of
those semicriminal, semi-pathological propensities which one hands
over with a shudder to the specialists in mental disease. All kinds
of social customs and economic practices, affecting the
distribution of wealth and of economic rewards and penalties, which
we now maintain at all costs, however distasteful and unjust they
may be in themselves, because they are tremendously useful in
promoting the accumulation of capital, we shall then be free, at
last, to discard.
Of course there will still be many people with intense, unsatisfied
purposiveness who will blindly pursue wealth-unless they can find
some plausible substitute. But the rest of us will no longer be
under any obligation to applaud and encourage them. For we shall
inquire more curiously than is safe to-day into the true character
of this “purposiveness” with which in varying degrees Nature has
endowed almost all of us. For purposiveness means that we are more
concerned with the remote future results of our actions than with
their own quality or their immediate effects on our own
environment. The “purposive” man is always trying to secure a
spurious and delusive immortality for his acts by pushing his
interest in them forward into time. He does not love his cat, but
his cat’s kittens; nor, in truth, the kittens, but only the
kittens’ kittens, and so on forward forever to the end of cat-dom.
For him jam is not jam unless it is a case of jam to-morrow and
never jam to-day. Thus by pushing his jam always forward into the
future, he strives to secure for his act of boiling it an immortality.
Let me remind you of the Professor in Sylvie and Bruno :
“Only the tailor, sir, with your little bill,” said a meek voce
outside the door.
“Ah, well, I can soon settle his business,” the Professor said to
the children, “if you’ll just wait a minute. How much is it, this
year, my man?” The tailor had come in while he was speaking.
“Well, it’s been a-doubling so many years, you see,” the tailor
replied, a little grufy, “and I think I’d like the money now. It’s
two thousand pound, it is!”
“Oh, that’s nothing!” the Professor carelessly remarked, feeling in
his pocket, as if he always carried at least that amount about with
him. “But wouldn’t you like to wait just another year and make it
four thousand? Just think how rich you’d be! Why, you might be a
king, if you liked!”
“I don’t know as I’d care about being a king,” the man said
thoughtfully. “But it dew sound a powerful sight o’ money! Well, I
think I’ll wait-“
“Of course you will!” said the Professor. “There’s good sense in
you, I see. Good-day to you, my man!”
“Will you ever have to pay him that four thousand pounds?” Sylvie
asked as the door closed on the departing creditor.
“Never, my child!” the Professor replied emphatically. “He’ll go on
doubling it till he dies. You see, it’s always worth while waiting
another year to get twice as much money!”
http://www.eco.utexas.edu/~hmcleave/368keynesgrandchildrentable.pdf
Ted
