This is probably against my best interest, but it's Friday afternoon. So, inspired by @ericlonners and @Undercoverhist -- and with no responsibility for errors...
one like = one theory of the rate of interest.
1. Aristotle: "And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth this is the most unnatural."
2. Mercantilists: Rate of interest determined by the volume of money. Relative rate of interest vis-a-vis trading partners determines national prosperity. Government should enact legislation to lower the rate of interest to four per cent.
3. Cantillon: Interest is paid out of profits. Borrowers need capital, lenders fear loss. Interest compensates for risk. Not determined by scarcity of money but supply and demand for loans. Effect of increase in money supply depends on recipient: capitalists save, landlords spend
4. Hume: "Of interest". Anti-mercantilist. Quantity theory of money. Increase in money has no effect on rate of interest. Interest rate is determined by supply and demand for loans, as per Cantillon.
5. Turgot: Anticipates Austrian capital theory and Wicksell. Interest is price of loans: reward for waiting and for risk. Emphasises time of production. Interest is paid by workers to capitalists in return for the advance of wages. Distinguishes "natural" and market rates.
6. John Locke: The correct rate of interest is the "natural" rate of interest, decided by supply and demand in the market.
7. Say: The price of credit, of "capital lent". Unaffected by the quantity of money. The "rate of interest ought no more to be restricted, or determined by law, than . . . the price of wine, linen, or any other commodity."
8. Smith: "Of stock lent at interest"; Rate of interest determined by the "profits of stock"; Criticises usury and calls for legal maximum on rates of interest at "not much above" market rate.
9. Senior: The reward for abstinence. Accumulation of capital requires capitalists to abstain from consuming profits. "The conduct of a person who either abstains from unproductive use of what he can command, or ... prefers the production of remote to that of immediate results"
10. Ricardo: Changes in money supply have only temporary effects on rate of interest. The rate of interest is "ultimately and permanently governed by the rate of profit". Rate of profit determined by long-run declining marginal productivity in agriculture.
11. Mill: Ricardo is wrong. Rate of interest is determined by supply and demand for loans; not affected by money supply other than short run. Market rate varies. Natural rate determined by level of capital accumulation and preferences over activity and leisure.
12. Tooke: Ricardo is wrong. See Mill.
13. Jevons: The marginal contribution of additional capital: "The interest of capital is ... the rate of increase of the produce divided by the whole produce". Anticipates Böhm-Bawerk with emphasis on time taken in production and "subsistence fund" concept of capital.
14. Wicksteed: Rejects Jevons "time in production" formulation. Rate of interest is the annual perpetual increase in income produced by an increment of capital.
15. Marshall: Supply and demand. Replaces Senior's "reward for abstinence" with "reward for waiting": Supply curve derived from marginal disutility of postponing consumption. Demand curve derived from marginal productivity of capital.
16. Marx: Only labour produces value. Surplus value arises from exploitation of labour by capital. This is divided between industrial capital (borrower), interest-bearing capital (lender). No law determines the division; no natural rate. Interest is an irrational form of price.
17. von Wieser: Capital is stock of non-permanent resources, periodically consumed and reproduced. Interest expresses "definite relation between capital value and net return." Interest rate is percentage net increment to capital employed in a specific production interval.
18. Böhm-Bawerk: Interest is price of "roundabout methods of production". Capital represents a "subsistence fund" for workers. Supply of savings increases with rate of interest because of time preference. Criticises Marx's theory of interest: neglects time.
19. Menger: Interest is the return on money; must be distinguished from yield on capital. "Time will come when people will realize that Böhm-Bawerk’s theory [of capital and interest] is one of the greatest errors ever committed"
20. Walras: Distinguish "capital stock" and "capital services". Price of capital services fixed by demand (savings) and supply (capital stock) in system of simultaneous equations along with markets for consumer goods, capital goods and other factors of production.
21. Cassell: Interest is the price of waiting. Conceptually follows Marshall but sets theory in Walrasian general equilibrium system system of simultaneous equations.
22. Wicksell: Adopts Jevons and Böhm-Bawerk's "subsistence fund" theory of capital. Dual-rate theory set in a "pure credit" economy. Natural rate determined following Böhm-Bawerk. Difference between bank rate and natural rate determines rate of inflation.
23. John Bates Clark: Interest rate equals the marginal productivity of capital. An ethical statement as well as a technical one: capital and labour get what they deserve: interest and wages respectively.
24. Mises: Develops Wicksell's dual-rate system to incorporate Böhm-Bawerk's "roundabout methods of production" theory of capital. Writes a few brilliant paragraphs and then appears to lose interest.
25. Hayek: Takes Mises' paragraphs and turns them into several books. Demonstrates problems with Wicksell's theory for a growing economy. Market interest rate below natural rate causes "forced saving" and crisis. Argues with Cambridge Keynesians.
26. Lionel Robbins: Copied Hayek. Not very impressively.
27. J.A. Hobson: Criticised Hayek. Denies relationship between saving and rate of interest. Reduction in rate of interest increases profits and worsens underconsumption problems. Opposite of "forced saving".
28. Schumpeter: Interest is the reward for innovation. Without the introduction of "new combinations" there is no interest. Bank lending makes available resources for innovation but causes temporary disruption of the price system. Denies the "reward for waiting" theory.
29. Keynes Mk. I (Treatise on Money): See Wicksell.
30. Keynes Mk. II: (General Theory Ch. 13): Liquidity preference. The rate of interest is the opportunity cost of liquidity in an uncertain world.
31. Keynes Mk. III: (General Theory Ch. 17): Adopts Sraffa's "own rates of interest", derived from forward and spot prices for any commodity, including money. Different "natural rate" exists for each level of employment. The money rate "rules the roost" in a crisis.
32. Irving Fisher: Marginalist theory of impatience. Later versions also include inter-temporal production function.
33. Veblen: Interest is institutionally specific. Fisher is wrong because he derives the rate of interest before he has specified the institutional framework.
34. Hicks-Tsiang: Use Walras law; eliminate money market; derive excess supply in remaining n-1 markets; implied excess demand in money market determines rate of interest.
35. Lange: Start with Hicks-Tsiang; assume equilibrium in all markets: there's no need for money! There is no money market!
36. Hicks: Neoclassical synthesis; IS-LM; Government fixes supply of money. Supply of money determines rate of interest. Rate of interest determines investment and output. Consumption not affected by rate of interest.
37. Friedman: Restates QTM. Government fixes supply of money. Liquidity preference replaced with loanable funds. Change in money supply affects output in short run but only inflation in long run. Steady growth of money supply will minimise disturbance in loanable funds market.
38. Solow: Aggregate production function. Marginalist factor rewards theory of Marshall, Jevons, et. al applied to macroeconomic system. Rate of interest is marginal productivity of capital. No optimizing supply (saving) decision.
39. Cambridge Keynesians: Economies evolve in historical time not logical time. Can't measure 'capital'. Solow is wrong: No monotonic relationship between rate of interest and choice of technique. Rate of interest is determined by rate of profit.
40. Sraffa: System of equilibrium prices can be derived without marginalist principles, and with no direct role for factor demands. Marginalist theory is incoherent: rate of interest is not determined by marginal productivity of capital but by rate of profit. See also: Ricardo.
41. Samuelson Mk. I: Solow, but with more nuance and micro theorising.
42. Samuelson Mk. II: Population growth rate determines rate of interest.
43. Samuelson Mk. III: The Cambridge Keynesians are right. This is unfortunate.
44. Kalecki: 'Principle of increasing risk': smaller firms charged higher rate of interest. Investment determines profits: 'workers spend what they get, capitalists get what they spend'. Higher investment may lead to lower corporate debt. Interest is a distributional variable.
45. American Post-Keynesians: Time matters. Something something non-ergodic process. See also: Keynes Mk. II.
46. Kaleckian Post-Keynesians: There is no natural rate. The rate of interest determines distribution of income between capitalists and rentiers.
47. Minsky: Balance sheets matter. Interest flows are result of past decisions to borrow for financing capital investment, based on perceived risk on part of lenders and borrowers. Stability breeds instability. Increase in interest rate when leverage is high causes crisis.
48. Loanable funds: Perjorative. Over-used has rendered mostly meaningless. See also: neoliberalism.
49. Stiglitz-Weiss: Asymmetric information between lenders and borrowers means rate of interest is higher than optimal rate; result is adverse selection and credit rationing.
50. Real Business Cycle DSGE, labour only version: natural rate = Fisherian time-preference of representative agent. Policy rate of interest has no real effect.
51 Real Business Cycle DSGE, with capital: Natural rate given by supply = Fisherian time-preference of representative agent and demand = marginal productivity of capital. Policy rate of interest has no real effect.
52. New Keynesian DSGE: Real Business Cycle plus sticky prices. Policy rate of interest has real effects in the short run. r <> r* has no real effects in long run, only (dis)inflationary. See also: Friedman.
53. Anwar Shaikh: Interest is cost of provision of bank lending. General price level determines nominal rate of interest. There is no natural real rate.
54. neo-Austrians: Likes: Gold, Bitcoin; Dislikes: Bubbles, central banks. See also: zerohedge dot com
55. Piketty: r>g. See also: Solow.
56. Summers: Secular stagnation; Something something falling natural rate of interest.
57. Goodhart-Nangle: Demographics determine real long rates. See also: Samuelson Mk. II.
58. Covered interest parity: interest rate differential between two currencies in the cash money markets should equal the differential between the forward and spot exchange rates.
59. Uncovered interest parity: interest rate differential between two currencies should equal the expected change in exchange rates (no forward contracts).
60. Tobin: structure of interest rates and demand for money are affected by investors' portfolio preferences.
61. CAPM: In an ideal market everyone would be best off holding identical portfolios: investors shouldn't have portfolio preferences.
62. Myrdal and Lindahl: Wicksell's definition of the natural rate is deficient. Real return on capital and money market rates are not independent in a multi-good non-stationary economy. Natural rate may not be independent of monetary policy. See also: Hayek.
63. Neo-Fisherism: Real rate of interest = nominal rate - rate of inflation. Real rate is exogenous in long run. Higher inflation requires a higher nominal rate.
64. Market monetarism: Neo-Wicksellian focus on interest rates is misguided. Interest rate is the market price of loans not price of money. Changes in money supply affect nominal output directly. Expectations matter. Policy should target nominal GDP level.
65 (49a). Ramsay-Cass-Koopmans: Solow model with constant saving replaced with Fisherian inter-temporal optimisation. Implicit marginalist natural rate of interest but representative agent and no central bank so no lending or borrowing.
66 (45a). Basil Moore: "Horizontalist" Post-Keynesian. Loans create deposits. Loans supplied on demand by banks. Banks obtain reserves without restriction from central bank at policy rate. Credit infinitely elastic (horizontal) at policy rate. See also: Kaldor.
67 (45b). Stucturalist Post-Keynesians: Institutional structure of banking system matters. Credit supply is relatively elastic but not "horizontal": an upward sloping function of the rate of interest.
