Psychology Dictionary of ArgumentsHome
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| Loans: In economics, loans refer to borrowed funds provided by a lender (e.g., bank) to a borrower, with the agreement to repay the principal amount plus interest over a specified period. Loans facilitate consumption, investment, and economic growth by providing access to capital for individuals, businesses, and governments. See also Credit, Money, Price, Time, Time preference, Consumption, Investments._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Neoclassical Economics on Loans - Dictionary of Arguments
Rothbard III 421 Loans/Neoclassical economics/RothbardVsNeoclassical economics/Rothbard: Where is the producers’ loan market? This market is always the one that is stressed by writers, often to the exclusion of anything else. In fact, “rate of interest” generally refers to money loans, including loans to consumers and producers, but particularly stressing the latter, which is usuallyquantitatively greater and more significant for production. The rate of interest of money loans to the would-be producer is supposed to be the significant rate of interest. In fact, the fashionable neoclassical doctrine holds that the producers’ loan marketdetermines the rate of interest (…). >Neoclassic economics, >Rate of interest/Rothbard. Rothbard III 422 RothbardVsNeoclassical economics: this sort of approach completely overlooks the gross savings of the producers and, even more, the demand for present goods by owners of the original factors. Instead of being fundamentally suppliers of present goods, capitalists are portrayed as demanders of present goods. >Production structure/Rothbard, >Production/Rothbard. This approach misses the point very badly because it looks at the economy with the superficial eye of an average businessman. The businessman borrows on a producers’ loan market from individual savers, and he judges how much to borrow on the basis of his expected rate of “profit,” or rate of return. The writers assume that he has available a shelf of investment projects, some of which would pay him, say 8 percent, some 7 percent, some 3 percent, etc., and that at each hypothetical interest rate he will borrow in order to invest in those projects where his return will be as high or higher. In other words, if the interest rate is 8 percent, he will borrow to invest in those projects that will yield him over 8 percent; if the rate is 4 percent, he will invest in many more projects - those that will yield him over 4 percent, etc. In that way, the demand curve for savings, for each individual, and still more for the aggregate on the market, will slope rightward as demand curves usually do, as the rateof interest falls. The intersection sets the market rate of interest. Rothbard: Superficially, this approach might seem plausible. It usually happens that a businessman foresees such varying rates of return on different investments, that he borrows on the market from different individual savers, and that he is popularly considered the “capitalist” or entrepreneur, while the lenders are simply savers. >Loans/Rothbard. Rothbard III 423 RothbardVsNeoclassical economics: The cardinal error here is an old one in economics - the attribution of value-productivity to monetary investment. There is no question that investment increases the physical productivity of the productive process, as well as the productivity per man hour. Indeed, that is precisely why investment and the consequent lengthening of the periods of production take place at all. But what has this to do with value-productivity or with the monetary return on investment,(…)? Solution/Rothbard: (…) producers benefit, not from the gross revenue received, but from the price spread between their selling price and their aggregate factor prices. >Factors of production/Rothbard._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Neoclassical Economics Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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