Progress and Poverty · Chapter
V: The Law of Interest explained
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.
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.
Free preview opens on this chapter — companions, themes, and character notes appear beside the text.
Narrative arc
Story tension across the book — this chapter sits in Exposition.
- Setup
- Escalation
- Breaking point
- Aftermath
- Closing
This is the story's dramatic climax because it marks the emotional and intellectual peak where the author, hav…
Full beat labels and climax notes unlock in the reader.
Follow the arc while readingThemes 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.
Characters to notice
- Thomas Carlyle
Referenced in a hypothetical 'fool's paradise' example.
Key passages
“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.
