Faiz teorileri üzerine bir inceleme: Finansal istikrarsızlık hipotezinin temel dayanağı

Abstract

Bu çalışma belli başlı faiz teorilerini karşılaştırmalı olarak incelemektedir. Faizin tarihsel gelişim ve seyrine kısaca değinildikten sonra literatürde çok sayıda faiz teorisi olmasına rağmen çalışma esasen belli başlı üç faiz teorisini incelemektedir. Bu teoriler Böhm-Bawerk faiz teorisi, Fischer ve Keynes tarafından ileri sürülen teorilerdir. Keynes’in faiz teorisi eksik bir teoridir. Bu sebeple faiz olgusunu analitik olarak ispatlamaktan uzaktır. Böehm-Bawerk ve Fisher’in teorilerine gelince genel olarak yöneltilen temel itiraz tam öngürülebilirlik varsayımı ile ilgilidir. Bireyler belli bir süre için sahipliğinden vazgeçtikleri servet ya da varlığa karşılık geriye belli bir miktar fazlayı faiz olarak talep etmelerini gerektirebilecek pozitif bir zaman tercihine sahip olabilmeleri ihtimaline rağmen, ileri sürülen teorik çerçevede belirsizlik veya tesadüfülik orijınal yatırımda belli bir getiriyi sağlayacak sabit belli bir şekle sahip üretim imkanları (dönüşüm) eğrisinin var olduğunu varsayım olarak kabul eden borç alıcı tarafta sermayenin sabit bir zaman fiyatı olduğu haklılığını geçersiz kılar. Bu çalışma faize dayalı finans işleminde fon sağlayıcı ile fon kullanıcı arasında geliştirdiği tesadüfi dengesizlik kavramıyla finansal istikrarsızlık teorisi arasında bir bağ kurmaktadır. Buna göre kapitalist finansal istikrarsızlığın temel kaynağı faize dayalı finans yönteminden kaynaklanan tesadüfi dengesizlik olgusudur.

The interest rate based financial practices have been carried out since the beginning of the history. One way or another a kind of interest based lending practices are performed in every society. On the other hand interest based transactions have been under the strict control of authorities in nearly all societies. Some time the interest based lending had been banded, for most of the time it had been restricted with a maximum rate, or it had been regulated with other sources of methods. Now days although liberal trend let a general deregulation all over the world about financial practices and interest rate based lending, current economic and financial crises point out issues which are directly related the rates of interest. In order to deal with the related issues there is need to look at various theories of interest rate. Although there are numerous theories of interest rate, an important three of them call special attention. These are theories named as Boehm-Bawerk, Fischer and Keynesian interest rate theories. This paper makes a brief survey of these theories in order to compare and contrast the main explanatory powers of those theories. Although most of the theoretical attempts to explain the existence of interest rates and their determination have been in the last two centuries, the practice of interest based financing is ancient, for example, old Sumer documents, from about 3000 B.C., reveal a systematic use of credit based loans for goods which often carried interest. It is also argued that in prehistoric times, even before the development of common measures of value, a medium of exchange, probably credit existed (Homer, 1976.p.17). On the other hand, in different historical communities nearly all types of interest based financing are prohibited; and legal maximum rates have often been declared by the authorities. Broadly, restrictions on interest rates seem to originate mostly from a religious basis and rarely on secular grounds. Before the three monotheist religions of Judaism, Christianity and Islam, we come a cross Hammurabi Codes in ancient Mesopotamia, Solon's reforms in ancient Greece, and the Twelve Tables in Roman Law. These ancient civilizations often laid down basic regulations such as the maximum level of interest, rather than completely prohibiting interest based practices (Homer, 1976.p.25-30.). In Europe there has been a significant controversy between the Church and the people who were in favour of interest. The controversy about the rate of interest continued until the Renaissance and, the Reformation in Europe, particularly in Christian communities, but Christian Church Doctrine which bans interest stated firm. The Reformation, the religious revolution of the 16th century, brought the Church Doctrine under review. Martin Luther (1483-1536), Zwingli(1484-1531), Calvin (1509-1564) criticized the Doctrine in their writings. Luther accepted that interest was a concession to human frailty. Furthermore, Calvin had a great effect on the anti-usury law by discriminating between usury and interest with respect to the risk involved in the use of borrowed funds (Taylor and Evan, 1987.). Thus, with the widespread reforms in Europe, Church Doctrine lost its meaning in practice (Homer, 1976. Ch.3). However, until the 19th century the questions of why the rate of interest exists and it is determined were not significantly examined. On the other hand, although interest has been accepted as a price for money, this price was not allowed to be determined by basic market forces, but it has been rather strictly controlled and regulated by public authorities through Usury Laws and other different regulations, and also by oligopolistic banking and the merchant structure in almost every Western country until recently. It can be said that decontrol and deregulation of the rates of interest have been practised mostly in the last two decades in the history of the capitalist system. In the following subsection we will briefly discuss the main economic functions of interest rates. In conventional economics, the interest rate is simply regarded as a price which is like the rate of exchange between two goods. In the case of interest, actual money amounts at a different time horizon are exchanged. In fact, money could be any material or good as long as it serves the functions of money. The speciality of the interest rate as a price is the way in which the exchange occurs between an amount of money today and another amount of money tomorrow. Thus, the rate of interest is an intertemporal price of money. Hence, time is the main factor in the exchange of money with money. The interest rate is simply regarded as the price of capital in the capitalist economic system. Interest rates, in comparison with rates of profits, are thought to have the main determining role over the volume of investment, of savings, level of employment, the level of prices and the balance of payments. Because it is an intertemporal price of capital, the interest rate is the single criteria for the intertemporal allocation of resources (Malinvaud, 1969.). Basically, on one hand the interest rate as a price of capital determines the level of investment in conjunction with productivity of the capital, on the other hand it determines the level of savings in the economy. In other words, it determines the demand and supply for funds in the economy. Hence, the interest rate as a price of capital is a central determinant in capital markets. Because of the vital importance of capital in the capitalist system, interest, like capital, is a main characteristic feature, and indeed in a sense a peculiarity, of capitalism, where its position reaches the maximum extent. Basically the interest rate is most strategic price in market economies. The very peculiar function of interest rate is, then, to mobilise and allocate resources through their uses in a rational and automatic way as the other prices in the economy. Interest rates are established in such a way that, like any other spot prices, they ensure an equilibrium between supply and demand for purposes of different projects. All economic agents base their decision on interest rates as well as other prices (Malinvaud, 1969.). In general, interest rates equalize the demand and supply for capital through progressive adjustment on the financial market (Malinvaud, 1969.). In the absence of interest rates in an economy, such as socialist economies which do not use interest rates because they basically do not have a free-price mechanism, it is not possible to match demanded funds with supplied funds in a cost efficient way. In socialist practices, often relative prices and prospective indicators calculated by the authorities were used as criteria for project selection and decisions, because technical or relative(shadow) prices do not represent the marginal productivity of resources in order to reach an optimal amount of any resource in its use (Wiczynski, 1978., Malinvaud, 1969.). Wiczynski reports that because of the inefficiency of technical prices since 1960s most of the socialist governments in Eastern Europe have introduced interest both, as a price and instrument as an economic policy tool because the free allocation of capital to enterprises led to excess demands, widespread hoarding, underutilization and a wasteful neglect of such assets, and all that in the face of prevailing shortage in the economy. In a free market economy, the interest rate is simply the price in the money and capital markets. There is no doubt that the rate of interest is regarded as a price which performs the same function like the price of any good in its market. In the following section, after reviewing a brief history of interest rate theories, we contrast and compare the most important of these theories. In the literature numerous interest rate theories have been set up in order to explain why the rate of interest exists and how it is determined. Most of the theories, especially earlier ones, depend on a single factor in the explanation of the interest rate phenomenon. Traditionally, rationalizations for the existence of interest rates are based on three major grounds:(a) the productivity argument states that borrowed capital can be used for productive purposes, hence the lender is entitled to a share in the resulting output; (b) the abstinence argument claims that the saving of capital involves the sacrifice of current consumption which is valued more than future consumption; and (c) the liquidity argument states that the convenience of having liquid money requires compensation in the case of departure from the liquidity. These basic justifications were historically put forward by Adam Smith, E. Bohm-Bawerk, and J. M. Keynes (Wiczynski, 1978. p.107). In addition, risk and the cost of the administration of credit have been long recognized as additional grounds for charging interest (Taylor and Evans, 1987). The classic tendency toward interest rates is parallel to the classical distribution theory. According to classical distribution theory, the worker gets a wage, the landowner gets rent and the entrepreneur gets a profit, and then, naturally the capitalist gets interest from capital used by the entrepreneur (Conard, 1959:32). Thus, as is often argued, there is identification of interest and profit in the classical argument. The basic reason for that must be similarly the identification of the capitalist with the entrepreneur. According to Adam Smith, the reason for a lender charging interest is because the borrower can make a profit. Thus, the interest of money is always a derivative revenue in this context. It is the basic idea that interest is derived from profit and its rate is determined by and equal to that of the profit. According to Fisher, however, the identification of interest rate with profit, of entrepreneur with capitalist, are fundamental errors in the classical theory, because while profit is just a residual of gross cost and revenues, the rate of interest is related to individual preferences concerning the allocation of income stream on the time horizon (Fisher, 1982. p.229). Basically there are two contrasting concepts of interest which are as follows: the traditional view in which interest is considered as one specific type of income, namely the functional share earned by capital; the other is Fisher and Knight's view in which interest is a way of looking at a percentage of the capital value of all income sources (Conard, 1959. p.6.). In the case of questions about why a rate of interest exists and how it is determined, there are basically quite a lot of theoretical arguments, but here we will cover the most influential three basic theories. Before doing this, it could be useful to mention briefly that there are three old theories about interest, which are the abstinence theory, productivity theories and uses theory. These theories are classified as single cause theories of interest (Conard, 1959. p.30-40., Fisher, 1982. chp.2.). They basically justify the existence of the interest rate through the productivity argument of capital, and the interest rate determination is simply left to the supply and demand for funds as in any other commodity market in the economy. After a brief historical introduction about practices and theories of interest based financing section III summarizes basic economic functions of interest rate in an economy. Section IV discusses main theories of interest rates. Section V argues that the interest based financial system diseased with unbalanced randomness of production sector. The paper hypothesizes that the unbalanced randomness of production sector could be the main reason for the instability nature of the capitalist system. For this reason, the paper further hypothesizes that the financial instability hypothesis could be linked with this concept of unbalanced randomness. The section VI concludes the paper.