Interest Is Not the Marginal Product of Capital

Lee esto en Español

11/23/2025 Robert P. Murphy

Bob revisits capital and interest theory to show why the textbook result “interest = MPK” only holds in a one-good world, and why in actual markets the interest rate emerges from time, prices, and capital valuation—not raw productivity.

Bob and Alberto Bisin Discuss the Use of Mathematics in Economics: Mises.org/HAP527a
Bob’s Dissertation, “Unanticipated Intertemporal Change in Theories of Interest”: Mises.org/HAP527b

The Mises Institute is giving away 100,000 copies of Hayek for the 21st Century. Get your free copy at Mises.org/HAPodFree

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.

Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.