Monetary crisis and interest -bearing capital: A history of thought perspective

The dissertation conducts historical and rational reconstructions of Karl Marx's monetary theory appearing in Part 5, Volume III of Capital . Part 5 constitutes Marx's attempt to formulate a monetary theory which encompasses economic categories such as the banking system, credit system, financial markets, bank money, bills of exchange, and interest rates. However, due to the incomplete nature of Part 5 this broadly defined monetary theory has been relatively ignored by economists. The reconstructions presented here contribute to Marxian economics as well as to the history of economic thought.;Three particular topics in the monetary theory of Part 5 are reconstructed. The first reconstruction concerns the relationship between the labor theory of value and interest-bearing capital. Contrary to the literature, the dissertation demonstrates that the labor theory of value is consistent with Marx's definition of the value of interest-bearing capital. This demonstration reveals the logical consistency within Marx's theoretical framework. The second reconstruction considers the reasons for Marx's rejection of the natural rate of interest and replacement with the average rate of interest. Three new reasons for Marx's rejection of the natural rate of interest are presented in the dissertation. It is also argued that Marx's use of an average rate of interest provides an important, but little studied, concept for interpreting his monetary theory. The third reconstruction attempts to establish the relationship between monetary theory and crisis theory. The dissertation demonstrates that three possible interpretations can be formulated from Part 5 in order to specify the theoretical relationship: Keynesian perspective, realization of surplus-value perspective, and a modified saving-investment approach.;The reconstructions establish that Marx had the beginnings of a very advanced monetary theory. Furthermore, the reconstructions demonstrate that Marx's work represents a transition in the history of monetary theory between classical economics and the work of John Maynard Keynes. Far from being a weakness within Marx's work, the dissertation establishes that the monetary theory contained within Part 5 is an area of strength which deserves more attention from scholars.