Original scientific paper
https://doi.org/10.1080/1331677X.2017.1305801
A structural explanation for high interest rates in a rentier-led economy with endogenous money
Urban Sušnik
Abstract
In neoclassical economic analysis factors receive their rewards based
on their relative scarcity; the more abundant a factor is, the lesser its
remuneration. This approach can be traced back to Ricardo’s theory of
rent on land. While this is a sound theory for determining rent on land,
it cannot be generally applied to all production factors such as labour
and capital, especially since the nature of the latter lends itself to
somewhat questionable quantification. In the paper I am able to show,
with the help of a stock-flow model, that in a setting where loanable
money capital and labour are abundant and virtually inexhaustible;
high, even double-digit interest rates, can emerge. Reasons for this are
structural, they depend on power relations between different groups
and on the underlying institutional arrangement in a given society.
Keywords
Classical School; institutionalism; post- Keynesianism; factor income; political economy; Marxist; Sraffian; historical; preclassical
Hrčak ID:
180820
URI
Publication date:
1.12.2017.
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