Marx on the Natural Rate of Interest: Did Marx Hold a Monetary Theory of Income Distribution?

Abstract

This chapter bears upon the question of whether the monetary theory of income distribution — as by suggested Sraffa in Productions of Commodities by Means of Commodities — must be considered equally alien to Marx’s system as it was to classical political economy. Sraffa, who was clearly inspired by the works of the classical economists and Marx, remarked that his own system leaves open the possibility that the money rate of interest determines the rate of profit:

The rate of profit, as a ratio, has a significance which is independent of any prices, and can well be ‘given’ before the prices are fixed. It is accordingly susceptible of being determined from outside the system of production, in particular by the level of the money rates of interest (Sraffa, 1960, p. 33).

It is well known that this idea, upon which Sraffa did not elaborate, implies a radical reversal of the causality in the theory of income distribution that is found in the works of Ricardo and Thornton.

Associate professor, Economic Faculty, State University of Groningen, PO Box 800, 9700AV Groningen, The Netherlands. This paper is taken from chapter 6 of Plasmeijer, 1990. The author would like to thank all the participants in the debate at the conference in Bergamo. He also thanks Geert Reuten for his help. The comments of two anonymous referees are gratefully acknowledged.