An introduction to the distributional role of bank credit to workers in a surplus approach framework

By Riccardo Zolea

PKES Working Paper 2403

February 2024

The Classics and Marx, but also more recent contributions inspired by them, assume that the interest rate is a part of the profit rate. Over time, however, credit towards consumption and for the purchase of housing by workers has taken on greater and greater economic weight. This paper therefore aims to study this issue from a theoretical point of view, analysing its premises and implications. After investigating the necessary conditions on both the demand side (workers) and the supply side (banks), an attempt is made to analyse the distributional effects of a change in the interest rate. The results appear rather complex and difficult to interpret, suggesting a certain difficulty in identifying a simple dynamic that can be generalised to any economic context.

Keywords: surplus approach; interest rate; mortgage

JEL classification: E11 E40