Two Approaches to the Concept of Interest-Bearing Capital

In recent years there has been a revival of interest in the issues of credit and finance among radical political economists, reflecting the remarkable growth and instability of the international financial system. This revival is especially important because credit and finance have not featured strongly in the renaissance of Anglo-Saxon radical political economy in the last three decades. The analysis of credit and finance from the standpoint of radical political economy has some evident distinguishing characteristics: for example, emphasis on the social relations encapsulated by the monetary system and focus on disequilibrium. At the same time, however, the theoretical underpinnings of radical analyses of credit and finance have not been sufficiently differentiated from those of mainstream theory, particularly from the methodological individualism that underlies concepts such as demand and supply of loans. This paper argues that appropriate underpinnings for radical analyses of credit and finance are provided by Marx's concept of interestbearing (or loanable) capital, that is, money capital traded as a commodity and commanding the payment of interest. Related to this notion is Marx's characteristic view that the rate of interest and the rate