Wednesday, 9 August 2017

Theories of Surplus Value, Part I, Chapter 7 - Part 11

[6. Berkeley on Industry as the Source of Wealth]

Marx quotes Berkeley,

““Whether it were not wrong to suppose land itself to be wealth? And whether the industry of the people is not first to be considered, as that which constitutes wealth, which makes even land and silver to be wealth, neither of which would have any value, but as means and motives to industry?” (The Querist, by Dr. George Berkeley, London, 1750, Query 38).” (p 372)

[7.] Hume and Massie

[(A) Massie and Hume on Interest]

Massie's “An Essay on the Governing Causes of the Natural Rate of Interest” appeared in 1750, whilst Hume's essay “Of Interest” was published in 1752, in the second part of his “Essays”.

Hume attacks Locke, whilst Massie attacks both Locke and Petty. The debate is of relevance today in relation to the actual role of quantitative easing.

Both Locke and Petty shared the delusion of those who propose QE today, that the rate of interest depends upon the supply of money, rather than as Massie and Marx point out, on the demand and supply of money-capital.

“Hume attacks Locke, Massie attacks both Petty and Locke, both of whom still held the view that the level of interest depends on the quantity of money, and that in fact the real object of the loan is money (not capital).” (p 373)

Hume also realised what many modern economists do not seem to realise, in this context, that simply printing money – and thereby devaluing it – cannot be a means of reducing interest rates, because money only acts as a means of measurement of value via prices. A devaluation of the money simply changes the unit of measurement of all prices proportionally, so that the nominal value of demand for money capital, and the nominal supply of money-capital increase by the same amount leaving the balance between the two unchanged.

“Massie laid down more categorically than did Hume, that interest is merely a part of profit. Hume is mainly concerned to show that the value of money makes no difference to the rate of interest, since, given the proportion between interest and money-capital—6 per cent for example, that is, £6, rises or falls in value at the same time as the value of the £100 (and. therefore, of one pound sterling) rises or falls, but the proportion 6 is not affected by this.” (p 373)

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