Comments on Interest Theory

Edmund J. Burke

[Reprinted from Land and Freedom, July-August 1937]

The article, "What is Interest?" by Raymond V. McNally in your May-June issue is to say the least inconclusive, if not contradictory and altogether unsatisfactory.

I am not impressed with the question, "Is it not significant that while there is a general agreement among economists on the law of rent, there is none on the question of interest?" It seems to me that in the first place, Adam Smith and Henry George alone are worthy to be dignified by the name economists; and second, that the only thing the other so-called professional economists have agreed on is the determination to so befog the science as to try to prevent all people from seeing that they are being robbed of their rent by the landlord.

In the fifth paragraph Mr. McNally says, "During all this time, however, in spite of ecclesiastical denunciation and civil laws, the phenomenon of interest persisted in industrial life, because it was a natural part of the economic organism and could not be abolished by men." Now the scientific definition of the word phenomenon is "a fact of knowledge." Therefore, by Mr. Nally's own statement "Interest" is a fact of knowledge and "a natural part of the economic organism" and beyond the power of man to abolish. To me this is a very strong statement as to interest being a definite and important factor in the natural laws of the natural science of Political Economy and one with which I agree entirely. But in the last sentence of his article Mr. McNally says, "The burden of proving that there is such a thing as interest in the economic science, therefore, and that it is unjust, rests entirely with the Marxist and other opponents of interest." If language means anything then this last sentence would indicate that Mr. McNally denies "that there is any such thing as interest in the economic sense" and defies Marxists and other opponents to prove that there is and that it is unjust. Now a thing that does not exist can not be unjust nor be anything. Also "a phenomenon that persists because it is a natural part of the economic organism beyond the power of man to abolish" must be a very definite natural economic fact that has been proven to exist already, and it can not be unjust because Nature is supreme and there is no appeal from her so far as man is concerned.

Now whether we know what interest is or not does in no way cast any doubt, in itself, on the fact of its existence. No ones knows what either magnetism or electricity is and yet both are phenomena which we make use of very effectively.

To my mind Henry George very clearly and satisfactorily established the laws of rent, wages and interest, defined them as well as land, labor, capital and wealth and demonstrated that Political Economy is a natural science as exact as any. L. D. Beckwith of Stockton, Calif, has very ably supplemented and clarified George's work.

Also capital and its derivative interest are very important factors in political economy. Without capital (labor saving implements, tools and machinery of all kinds) men, women and children would be condemned to hopeless labor and poverty, there could be no time for the arts and sciences, and civilization would be impossible.

I can not see what all the shooting is about as to capital and interest among true Georgeists, anyway.

The socialist type of mind is not worth wasting time over, as it seems incapable of clear thinking.