Anwar Shaikh and the Classical Theory of Interest: A Critical Note

Toporowski, Jan

Abstract

The Note examines the theory of interest put forward in Shaikh’s recent book Capitalism, Competition, Conflict, Crises which presents the classic Ricardian theory of interest, in which the rate of interest is determined by the industrial rate of profit, as the basis for the book’s analysis of banking and credit. The Note argues that the classic theory of Anwar Shaikh holds true only under special assumptions, namely when money is a produced commodity, and credit is external to the system of capitalist production. However, in the modern capitalist economy, credit is endogenous to the system of production and distribution. In this more general case, debt and interest have the function of redistributing income, but are unrelated to the rate of profit from production.

Citation

Toporowski, J. (2020). Anwar Shaikh and the Classical Theory of Interest: A Critical Note. Cambridge Journal of Economics, 44(2), 465-474. https://doi.org/10.1093/cje/bez034

• Journal Article Type: Article
• Acceptance Date: May 31, 2019
• Online Publication Date: Sep 6, 2019
• Publication Date: Mar 1, 2020
• Deposit Date: Jun 10, 2019
• Publicly Available Date: Jun 10, 2019
• Journal: Cambridge Journal of Economics
• Print ISSN: 0309-166X
• Electronic ISSN: 1464-3545
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• Volume: 44
• Issue: 2
• Pages: 465-474
• DOI: https://doi.org/10.1093/cje/bez034
• Keywords: Anwar Shaikh, Rate of Interest, Credit, Banking
• Publisher URL: https://academic.oup.com/cje