Profit vs Interest in Classical Writings: Turgot’s vs. Mill’s Contribution
Abstract
The mainstream classical theory of interest was part of the theory of profit as I have shown (Gootzeit 2006). The clearer separation of interest from profit took place gradually during the 19th century and even into the 20th. Turgot’s early role in this process has not been recognized. His ideas were ahead of physiocratic and even classical thought. I will illustrate his theory of interest and contrast it with John Stuart Mill’s. Interest was not only a part of 3-tier profits; it was also an opportunity cost for the "lender-entrepreneur" nonowner- of-land in agriculture. Interest was not only a direct function of profit, including rent; it was also a direct function of technology during industrialization and the excess demand for credit supplied by outside lenders. This was a "loanable funds" model, taken up later by Mill, but it was longer run because technology was so important. Interest was separated from profit because Turgot recognized that these loans would be outside-financed by lenders/risk-takers who earned interest, not owners who earned profit.Download Info
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic Info
Article provided by FrancoAngeli Editore in its journal HISTORY OF ECONOMIC THOUGHT AND POLICY.
Volume (Year): html10.3280/spe2010-002001 (2010)
Issue (Month): 2 ()
Pages: 5-21
Contact details of provider:
Web page: http://www.francoangeli.it/riviste/sommario.asp?IDRivista=121
Order Information:
Email:
Web: http://www.francoangeli.it/riviste/Elenco_Prodotti.aspx?startCode=DC
Related research
Keywords: Turgot; J. S. Mill; Interesse; Profitto; Fondi Mutuabili;Find related papers by JEL classification:
- B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
- E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
References
No references listed on IDEASYou can help add them by filling out this form.
Citations
Lists
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.Statistics
Access and download statisticsCorrections
When requesting a correction, please mention this item's handle: RePEc:fan:spespe:v:html10.3280/spe2010-002001For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stefania Rosato).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.