JP Konig has an excellent post up on the natural rate of interest and own-rates of interest.
He has links to a lot of good material - my post on it, some from LK and Jonathan, Bob's dissertation, etc. All this stuff has been linked several times - just click through to Konig's to get those. I think he sums it up exactly right:
Keynes created was a portfolio choice theory of assets in which all
returns are equalized in equilibrium. Using this framework, one can back
out all sorts of useful ideas about interest rates, term structures of
interest rates, and the liquidity premium on assets. It's a very useful
way of thinking about the world. I'd say its the best theory on interest
rates we have."
This is why I hate it when people parrot this idiot view that Keynes homogenized everything and the Austrians are so deep and insightful because they think that capital is not a homogenous blob. Whenever anyone says anything remotely like that I steeply discount the extent to which I think they understand Keynes, and really most of mainstream economics.
Keynes's whole point was precisely what Konig highlights here, that all different sorts of capital have their own own-rates. This varies with exactly what type of capital you're dealing with, as well as the size of the capital stock itself. For Keynes, capital is anything but a homogenous blob. And Konig is right that essentially we "back out" these own rates according to the cost of capital and the expected returns to that capital. These are the marginal efficiencies of capital - the critical rates that dictate whether a particular investment is worthwhile.
As I mentioned (and Konig seems to think this is reasonable), I don't usually have too much trouble embracing a "natural rate of interest" perspective. The key is to think about the natural rate as a money rate of interest (allowing for a liquidity premium, certainly) that's compared to all the other own-rates. The problem was with treating capital like money in the first place in talking about interest rates. And that mistake is embedded in Hayek's work, because he assumes that the interest rate equilibrates savings and investment. When you realize the interest rate determines how much savings is kept liquid and how much is kept illiquid - not the volume of savings itself - you avoid this mistake. This is not something that Keynes waits until 1936 to point out to Hayek. He says it in 1931 in reply to Hayek's reply to the Treatise.
This is how I read Keynes:
Capital is not homogenous. Each has its own own-rate. These are determined by expectations. They must be determined by expectations because consumption is not homogenous and when a person saves, investors cannot know for certain when they will consume that savings or what they will consume it on (if you are particularly good at figuring that out, you earn profits). These subjective own rates are compared to the interest rate, which is determined by the desire of households and firms to stay relatively more or less liquid. There are many possible equilibria because expectations about future demand can produce different rates of investment, which produce different levels of expenditures and income, which can produce different actual levels of future demand. There may be upper limits defined by classical or resource or supply constraints (however you care to characterize it), but that is a different matter. Moreover, one research interest of mine is the fact that human innovation and imagination means that even these "classical limits" to growth are themselves a function of particular investment expenditures we make today, so even they pose less of a limit than many people suppose, and have more Keynesian expectations-contingent multiple equilibria than many suppose.
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