Full text: Comment on Prof. Pivetti's paper

While I fundamentally disagree with this attitude I would 
not alkali exclude an influence of interest on the profit 
rate. As far as the extraordinary high rates of interest 
in recent years in the U.S. are concerned one may suspect 
that they have partly been shifted to prices, otherwise 
one should have thought the frequency of bankruptcies 
would have been even greater and the effect on investment 
more pronounced than was actually the case. The motive 
might have been the common experience of the pressure of 
debt, and the low real wage and material prices would 
have favoured the shift. 
In the last part of his paper ( which is rather hard to 
follow ) Prof.Pivetti tries to apply his theory where 
it would seem to have the least chance to fit: To the 
case of inflation. This is a hardly undertaking. One 
should have thought that in an inflation it would be the 
profit rate which would pull the interest rate up 
(by competition between the real and the financial ivestments) 
and not the other way round ,i.e. the interest pulling the 
profit rate down. But Prof Pivetti suggests exactly this: 
He maintains that it is the real rate of interest to 
which profit rate will adjust, because,he says, the real 
interest is the opportunity cost for the use of capital 
in production ( p.100 ). But since the real rate of interest 
is what the holder of a bond gets in real terms an 
entrepreneur who would equate his profit rate to it 
would not be able to maintain his capital intact unless 
he used his profits ( provided they were sufficient ) 
for this purpose.

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