Interest, Profit and Laws

Yanan Wang ()
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Yanan Wang: Xiamen University

Chapter Chapter 14 in The Basic Theory of Chinese Economy, 2026, pp 101-103 from Springer

Abstract: Abstract This chapter provides a systematic discussion of interest and profit as two central categories shaping the movement of Chinese capital. Rather than treating them separately, it examines their correlated development and clarifies how their “independent” forms emerged historically. It argues that in early modern thought interest was often treated as gain in general, with “profit” not yet clearly conceptualized; only with the expansion of commerce, the rise of capitalist production, and the displacement of usury by banking did profit come to be distinguished from interest and to determine its limits. Drawing on the historical evolution of economic ideas and the underlying transformation of economic realities, the chapter distills several basic principles: in pre-capitalist societies the interest rate tends to determine the profit rate, whereas in capitalist societies the profit rate constrains the interest rate; interest rates vary inversely with the level of industrial development and thus can serve as a rough indicator of development; and the larger the share of merchant capital, the lower the profit rate of industrial capital tends to be. These principles provide the analytical basis for explaining the distinctive Chinese forms of interest and profit in their historical development.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-95-6330-2_14

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DOI: 10.1007/978-981-95-6330-2_14

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