Interest Rate and Wages: The Distributional Role of Bank Credit to Workers in the Surplus Approach

The large majority of theoretical contributions on the nature of the relationship between the rate of profit and the rate of interest – the Classics and Marx, but also more recent contributions inspired by them – assume that the interest rate is a part of the profit rate, and thus that credit is only targeted at firms. Over time, however, credit toward consumption and for the purchase of housing by workers has taken on greater and greater economic weight, thanks also to financialization. This paper therefore aims to study this issue from a theoretical point of view, analyzing its premises and implications. After investigating the necessary conditions for credit to workers from both the demand side (workers) and the supply side (commercial banks), an attempt is made to analyze the functional distributional effects of a variation in the interest rate, at a high level of theoretical abstraction. Although the picture is rather complex, it seems possible to identify, at least in the short run, a clear inverse relationship between the interest rate and the real wage, passing through the increase in the price of commodities that can be reasonably considered within the basket of commodities of the real wage.