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The full employment interest rate implicit in classical economic theory

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  • Nicolas D. Cole

    (Formerly King’s College London University (BA)
    Cranfield University (MSc))

Abstract

By including the rate of normal profit in a simple model of the macro-economy, the full employment interest rate is deduced to be 4½% at which Labor is not exploited by Capital. Criticisms by Marx and Keynes of the free-market economy were misdirected at Classical theory instead of the manipulation of interest rates by Central Banks to favour Capital over Labor.

Suggested Citation

  • Nicolas D. Cole, 2022. "The full employment interest rate implicit in classical economic theory," Evolutionary and Institutional Economics Review, Springer, vol. 19(2), pages 625-643, September.
    • Handle: RePEc:spr:eaiere:v:19:y:2022:i:2:d:10.1007_s40844-022-00244-6
    DOI: 10.1007/s40844-022-00244-6
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    References listed on IDEAS

    as
    1. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1.
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    More about this item

    Keywords

    Rate of normal profit; Full employment interest rate; Classical theory; Central Banks;
    All these keywords.

    JEL classification:

    • B0 - Schools of Economic Thought and Methodology - - General
    • E0 - Macroeconomics and Monetary Economics - - General

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