Karl Marx’s ”Capital” Vol. 3 (Part 4/10)
Theory & Philosophy
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What Are Interest Rates Calculated?
Interest rates can't exceed profit earned from business or from borrowed person, because then they wouldn't be able to actually pay it back. So interest is going to need to come out of profit rate. As the profit rate goes up and more profit is earned, the interest rate will also go up. But there are exceptions. If there's a period of crisis when many people are borrowing money, lenders might raise their interest rates. And in crisis, the overall average profit rate may be quite low, and there's less money going around. The actual proportion of interest is determined in each individual moment between a lender and borrower.
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