[발췌: Hayek's PTC 27장] Long-Run Forces Affecting the Rate of Interest

출처: F.A. Hayek (Lawrence H. White 편집), Collected Works of F.A. Hayek, vol. 12: The Pure Theory of Capital, 2007년 재판.
자료: 구글도서 (cf. Mises Institute's version) ; 차례 및 일부 독서노트

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※ 발췌(excerpts): pp. 369 ~ [PDF 402 ~ ]

Chapter 27_ Long-Run Forces Affecting the Rate of Interest

Having considered in the last chapter the impact effect of any change in investment demand, we must now turn to the further repercussions of the changes we have observed. We have seen that, in a money economy, one of the effects of a change in the profitability of investment will be a release of money from (or an absorption of money into) idle balances and a consequent change in the size of the money stream which meets the streams of goods. We have not yet considered the effects on returns of this change in the money stream, since they will make themselves felt only after the short period with which we were concerned in the last chapter. 

Influences Determining the Shape of the Investment Demand Curve

The returns curve or investment demand schedule which then we treated as a given magnitude, or as an independent variable, will clearly be affected by changes in the size of the money stream. Before we can analyse these effects it will be necessary to make a somewhat closer examination of the factors which determine the shape of this curve in general, and at the same time to distinguish between the different ways in which the amount of investment can change and the effect of such changes on the returns curve.

So far we have not explicitly discussed the relation between the returns curve as used in the last chapter, which refers to the returns from successive amounts of money invested, and our earlier discussion of the productivity of investment in real terms. But so long as we treat prices as given, as we were able to do for the purpose of the analysis of the last chapter, the relationship is so obvious that it hardly needs further explanation. Just as successive amounts of investment expressed in terms of any other unit will bring decreasing returns, so the investment of successive doses of such quantities of input as can be obtained for a given amount of money will also bring decreasing returns.

Meaning of Changes in the "Amount of Investment"

Somewhat more careful consideration is needed of what exactly we mean here when we speak of an increase in investment.

• Strictly speaking, if we start from an initial equilibrium position where the existence of unused resources[1] is excluded by definition, an increase or decrease of investment should always mean a transfer of input from the production of consumers' goods for a nearer date to the production of consumers' goods for a more distant date, or vice versa. 
• But where we assume that this diversion of input from one kind of production to another is accompanied, and in part brought about, by changes in total money expenditure, we cannot at the same time assume that prices will remain unchanged. It is, however, neither necessary nor advisable to adhere for our present purposes to so rigid a type of equilibrium assumption. 
• At any rate, so far as concerns the impact effects of a rise in investment demand which we discussed in the last chapter, there is no reason why we should not assume that the additional input which is being invested has previously been unemployed, so that the increase in investment means a corresponding increase in the employment of all sort of resources without any increase of prices and without a decrease in the production of consumers's goods. 
  (1) This assumption simply means that there are certain limited quantities of various resources available which have been offered but not bought at current prices, but which would be employed as soon as demand at existing prices rose. 
  (2) And since the amount of such resource will always be limited, the effect of making this assumption will be that we must distinguish between the effects which an increase of investments and income will have while there are unused resources of all kinds available and the effects which such an increase will have after the various resources become successively scarce and their prices begin to rise. 

[1]  This means unused resources which could be had at the ruling market price. There will of course always be further reserve which will be offered only if prices rise. 

Effect of a Rise in Investment Demand on Income

The initial change from which we started our discussion in the last chapter, an invention which gives rise to a new demand for capital, means that with given prices the margin between the cost of production and the prices of the product produced with the new process will be higher than the ruling rate of profit, i.e. that the marginal rate of profit on the former volume of production will have risen.

• The first result of this, as we have seen, will be that investment will increase, the marginal rate of profit will fall, and the cash balances will decrease till the desire for holding the marginal units of the decreased cash balances is again just balanced by the higher profits which may be obtained by investing them. 
• This new rate of profit will be somewhere between the old rate and the higher rate which would exist if investment had not increased. But since this additional investment has been financed by a release of money out of idle balances, incomes will have increased, and as a consequence the demand for consumers' goods will also increase, although probably not to the full extent, as some of the additional income is likely to be saved.

Effects of a Rise in Incomes on Investment Demand

If we assume that there are unused resources available not only in the form of factors of production but also in the form of consumers' goods in all stages of completion, and so long as this is the case,

• (1) the increase in the demand for consumers' goods will for some time lead merely to an increase in sales without an increase of prices. (2) Such an increase of the quantity of output which can be sold at given prices will have the effect of raising the investment further, or, more exactly, of shifting our returns curve[(수익률 대비) 투자수요 곡선] to the right without changing its shape. 
• (3) The amount that it will appear profitable to borrow and invest at any given rate of interest will accordingly increase; and (4) this in turn will mean that, though some more money will be released from idle balances, the rate of interest and the rate of profit will be raised further. And (5) since this process will have raised incomes still further, it will be repeated: that is, every further increase in the demand for consumers's goods will lead to some further increase of the rate of profit. 
• But at every stage of this process some part of the additional income will be saved, and as rates of interest rise, any given increase in final demand will lead to proportionally less investment. (Or, what is really the same phenomenon, only seen from a different angle, successive increases of investment demand will lead to the increase of decreasing amounts of money from idle balances.) So the process will gradually slow down and finally to a stop.

Final Position of Rate of Return

Where will the rate of interest be fixed in this final equilibrium? If we assume the quantity of money to have remained constant, it will evidently be above the rate which ruled before the initial change occurred and even above the somewhat higher impact rate which ruled immediately after the change occurred, since every revolution of the process we have been considering will have raised it a little further. But under our present assumptions there is no reason why, even when this process comes to an end, the rate of interest need have risen to the full extent to which it would have risen in the beginning had the supply of investible funds been entirely elastic. Thus, under the conditions we have considered, the release of money from idle balances (and the same would of course be true of an increase in the quantity of money) may keep the rate of profit and interest lastingly below the figure to which it would have risen without any such monetary change.

Nature of Assumptions Underlying This Analysis

Let us be quite clear, however, about which of our assumptions this somewhat surprising result is due to. We have assumed[:]

• (1) that not only the supply of pure input but also the supply of final and intermediate products and of instruments of all kinds was infinitely elastic, so that every increase in demand could be satisfied without any increase of price, 
• or, in other words, (2) that the increase of investment (or we should rather say output) was possible without society in the aggregate or even any single individual having to reduce consumption in order to provide an income for the additional people now employed. 
• Or, in other words, we have been considering (3) an economic system in which not only the permanent resources but also all kinds of non-permanent resources, that is, all forms of capital, were not scarce. 

There is indeed no reason why the price of capital should rise if there are such unused reserves of capital available, there is even no reason why capital should have a price at all if it were abundant in all its forms. The existence of interest in such a world would indeed be due merely to the scarcity of money, although even money would not be scarce in any absolute sense; it would be scarce only relatively to given prices on which people were assumed to insist. By an appropriate adjustment of the quantity of money the rate of interest could, in such a system, be reduced to practically any level.

KHNW p183-3(b) {{

Mr. Keynes's economics of abundance

Now such a situation, in which abundant unused reserves of all kinds of resources, including all intermediate products, exist, may occasionally prevail in the depths of a depression. But [:]

• it is certainly not a normal position on which a theory claiming general applicability could be based. Yet it is some such world as this which is treated in Mr. Keynes's General Theory of Employment, Interest and Money, which in recent years has created much stir and confusion among economists and even the wider public. 
• Although the technocrats, and other believers in the unbounded productive capacity of our economic system, do not yet appear to have realised it, what he[Keynes] has given us is really that economics of abundance for which they have been clamouring so long. 
• Or rather, he has given us a system of economics which is based on the assumptions (1) that no real scarcity exists, and (2) that the only scarcity with which we need concern ourselves is the artificial scarcity created by the determination of people not to sell their services and products below certain arbitrary fixed prices. These prices are in no way explained, but are simply assumed to remain at their historically given level, except at rare intervals when “full employment” is approached and the different goods begin successively to become scarce and to rise in price.

}}

KHNW p185-1 {{
Now if there is a well-established fact which dominates economic life, it is the incessant, even hourly, variation in the prices of most of the important raw materials and of the wholesale prices of nearly all foodstuffs. But [:]

• the reader of Mr. Keynes's theory is left with the impression that these fluctuations of prices are entirely unmotivated and irrelevant, except towards the end of a boom, when the fact of scarcity is readmitted into the analysis, as an apparent exception, under the designation of “bottlenecks”.[주1] 

• [주1] I should have thought that (ㄱ) the abandonment of the sharp distinction between the “freely reproducible goods” and goods of absolute scarcity and the substitution for this distinction of (ㄴ) the concept of varying degrees of scarcity (according to the increasing costs of reproduction) was one of the major advances of modern economics. But Mr. Keynes evidently wishes us to return to the older way of thinking. This at any rate seems to be what his use of the concept of “bottleneck” means: a concept which seems to me to belong essentially to a naive early stage of economic thinking and the introduction of which into economic theory can hardly be regarded as an improvement. 

}}

• And not only are the factors which determine the relative prices of the various commodities systematically disregarded;[주2] it is even explicitly argued that, apart from the purely monetary factors which are supposed to be the sole determinants of the rate of interest, the prices of the majority of goods would be indeterminate. Although this is expressly stated only for capital assets in the special narrow sense in which Mr. Keynes uses this term, that is, for durable goods and securities, the same reasoning would apply to all factors of production. 

• [주2] It is characteristic that when at last, towards the end of his book, Mr. Keynes comes to discuss prices, the "Theory of Price" is to him merely "the analysis of the relations between changes in the quantity of money and changes in the price level" (General Theory, p. 296).

• In so far as “assets” in general are concerned[,] the whole arguments of the General Theory rests on the assumption that their yield only is determined by real factors (i.e. that it is determined by the given prices of their products), and that their price can be determined only by capitalising this yield at a given rate of interest determined solely by monetary factors.[주3] 

• [주3] Cf. General Theory, p. 137: "We must ascertain the rate of interest from some other source and only then can we value the asset by 'capitalising' its prospective yield".

• This argument, if it were correct, would clearly have to be extended to the prices of all factors of production the price of which is not arbitrarily fixed by monopolists, for their prices would have to be equal to the value of their contribution to the product less interest for the interval for which the factors remained invested.[주4] That is, the difference between costs and prices would not be a source of the demand for capital but would be unilaterally determined by a rate of interest which was entirely dependent on monetary influences.

• [4] The reason why Mr. Keynes does not draw this conclusion, and the general explanation of his peculiar attitude towards the problem of the determination of relative prices, is presumably that under the influence of the “real cost” doctrine which to the present day plays such a large role in the Cambridge tradition, he assumes that the prices of all goods except the more durable ones are even in the short run determined by cost. But whatever one may think about usefulness of a cost explanation of relative prices in equilibrium analysis, it should be clear that it is altogether useless in any discussion of problems of the short period.

Basic Importance of Scarcity

We need not follow this argument much further to see that it leads to contradictory conclusions. Even in the case we have considered before of an increase in the investment demand due to an invention, the mechanism which restores the equality between profits and interest would be inconceivable without an independent determinant of the prices of the factors of production, namely their scarcity. For, For, if the prices of the factors were directly dependent on the given rate of interest, no increase in profits could appear, and no expansion of investment would take place, since prices would be automatically marked to make the rate of profit equal to the given rate of interest. Or, if the initial prices were regarded as unchangeable and unlimited supplies of factors were assumed to be available at these prices, nothing could reduce the increased rate of profit to the level of the unchanged rate of interest. It is clear that, if we want to understand at all the mechanism which determines the relation between costs and prices, and therefore the rate of profit, it is to the relative scarcity of the various types of capital goods and of other factors of production that we must direct our attention, for it is this scarcity which determines their prices. And although there may be, at most times, some goods an increase in demand for which may bring forth some increase in supply without an increase of their prices, it will on the whole be more useful and realistic to assume for the purpose of this investigation that most commodities are scarce,  in the sense that any rise of demand will, ceteris paribus, lead to a rise in their prices. We must leave the consideration of the existence of unemployed resources of certain kinds to more specialised investigation of dynamic problems.


Effect of an Increase of Final Demand on Profit Schedule

This critical excursion was unfortunately made necessary by the confusion which has reigned on this subject since the appearance of Mr. Keynes's General Theory. We may now return to our main subject, the effect of a rise in incomes and final demand on the investment demand schedule and the rate of profit. The case which we shall now take up is the situation that will arise once the increased demand for consumers' goods can no longer be satisfied at constant costs because at least some of the factors from which additional consumers' goods would have to be produced become definitely scarce. It does not matter for our purpose whether this occurs immediately, as soon as incomes and the demand for consumers' goods increase, or not until later, for, as we have seen, the process by which increased investment increases final demand, and increased final demand invreases investment further, will fo on for some time. ( ... ... ) OFFLINE TEXT p. 377 (PDF on 410)