IDEAS home Printed from https://ideas.repec.org/a/oup/copoec/v25y2006i1p49-61.html
   My bibliography  Save this article

Finance Vs Ownership: Mill'S Two Abstinences And The Link Between Profit And Interest

Author

Listed:
  • Michael J. Gootzeit

Abstract

The difference between profit and interest was never clarified by the early classicalists, but J. S. Mill provided a partial answer: It was based on his two concepts of "abstinence". Interest was the reward for anonymous or "contract" personal saving without ownership--savings' financial function--while profit was the reward for personal saving to increase ownership. Although he focused on abstinence in the Seniorian tradition, Mill emphasized personal, not business, saving, as did Senior. Furthermore, Mill's "abstinence theory of interest and profit" has never been taken seriously as a complete theory, as has Senior's. This was because of his "loanable" funds' theory of interest, which was taken up by later writers. It is shown that this theory predicted that net profits and interest would vary indirectly. It used the net profit to help determine the interest rate, so it perpetuated the confusion between these two rates. Copyright 2006, Oxford University Press.

Suggested Citation

  • Michael J. Gootzeit, 2006. "Finance Vs Ownership: Mill'S Two Abstinences And The Link Between Profit And Interest," Contributions to Political Economy, Oxford University Press, vol. 25(1), pages 49-61, August.
  • Handle: RePEc:oup:copoec:v:25:y:2006:i:1:p:49-61
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:copoec:v:25:y:2006:i:1:p:49-61. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: https://academic.oup.com/cpe .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.