# V: The Law of Interest explained — Progress and Poverty

> Chapter companion for Progress and Poverty by Henry George.

## What happens

This chapter examines the law of interest, arguing that interest is determined by the average reproductive power of capital and that it is a corollary of the law of rent. George contends that capital is a form of labor, and the primary division in distribution is between rent and wages. He illustrates how interest and wages move together, and how rent absorbs surplus, reducing both.

## Themes in this chapter

### Distribution of Wealth

Explores how interest, wages, and rent interact in the distribution of produced wealth.

### Wages and Labor

Argues that capital is a form of labor and that wages and interest are interdependent.

### Land Ownership and Rent

Shows how rent absorbs surplus from capital and labor, linking interest to the margin of cultivation.

## Character check-ins

### Thomas Carlyle

Referenced in a hypothetical 'fool's paradise' example.

## Key lines

> Thus we bring the law of interest into a form which shows it to be a corollary of the law of rent.

The law of interest is derived from and dependent on the law of rent.

_Central thesis of the chapter._

> Capital is but a form of labor, and its distinction from labor is in reality but a subdivision, just as the division of labor into skilled and unskilled would be.

Capital is essentially a type of labor, and separating them is like distinguishing between skilled and unskilled work.

_George's redefinition of capital to simplify distribution analysis._

## Links

- HTML: https://www.betterreads.online/discover/progress_and_poverty_se/chapters/v-the-law-of-interest
- Book: https://www.betterreads.online/discover/progress_and_poverty_se
- All chapters: https://www.betterreads.online/discover/progress_and_poverty_se/chapters