ABSTRACT
Intertwined with the evolution of monetary fund as capital, interest on money arose in the mercantile periods in spite of the canonical prohibitions. Yet, in the milieu of these prohibitions and for the failure to recognise capital as a monetary fund, the classical and neoclassical ideas faltered on bringing out an acceptable theory of interest explaining what it is. The classical and early neoclassical theories had a clear apathy towards viewing interest as a monetary phenomenon. Why should money, a barren commodity, yield a return? They brought out productivity theories and time preference theories as non-monetary theories of interest. In the process and following the Ricardian tripartite division, interest and profits got muddled and economic studies continued practically without any theory of profits. Later, Keynes brought out a monetary theory of interest, but that became partly monetary and partly real too in later formulations. Interest links the future with the present, presuming a systemic everlasting growth in the future and makes money a self-breeding entity. At the same time it creates a double charge for capital as interest on debt finance and as depreciations on the physical assets created out of it.
