---
entity_slug: interest_or_use_of_money
evaluator: null
evaluated_at: '2026-02-23T05:38:21.123885'
overall_score: 4.0
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition clearly distinguishes interest as payment for capital
    use, derived from the borrower's profit opportunity, and correctly identifies
    it as derivative revenue from profits of stock. It avoids circularity and captures
    a distinct economic concept with good precision.
- name: source_grounding
  value: 5.0
  max_value: 5.0
  rationale: This entity is directly grounded in Smith's discussion in Book I, Chapter
    6, where he explicitly analyzes interest as compensation for allowing others to
    profit from one's capital. The characterization as derivative revenue from stock
    profits accurately reflects Smith's theoretical framework.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: The placement in "Distribution" is correct, as interest represents one
    of the fundamental ways that revenue from capital gets distributed between lenders
    and borrowers. This aligns perfectly with Smith's analysis of how different forms
    of income are allocated in the economy.
- name: vsm_relevance
  value: 2.0
  max_value: 5.0
  rationale: "Interest as a financial mechanism operates across multiple VSM levels\
    \ without naturally belonging to any specific system\u2014it affects operations\
    \ (S1), coordination (S2), and strategic decisions (S4). This makes it largely\
    \ VSM-neutral rather than having a clear systemic home."
- name: explanatory_value
  value: 4.0
  max_value: 5.0
  rationale: "The entity illuminates an important structural mechanism in Smith's\
    \ economic theory\u2014how capital generates returns through lending relationships\
    \ and profit-sharing between lenders and borrowers. It reveals the derivative\
    \ nature of interest income, adding genuine explanatory power to understanding\
    \ capital flows."
---

# Evaluation: Interest Or Use Of Money

## definition_precision — 4.0 / 5.0

The definition clearly distinguishes interest as payment for capital use, derived from the borrower's profit opportunity, and correctly identifies it as derivative revenue from profits of stock. It avoids circularity and captures a distinct economic concept with good precision.

## source_grounding — 5.0 / 5.0

This entity is directly grounded in Smith's discussion in Book I, Chapter 6, where he explicitly analyzes interest as compensation for allowing others to profit from one's capital. The characterization as derivative revenue from stock profits accurately reflects Smith's theoretical framework.

## domain_placement — 5.0 / 5.0

The placement in "Distribution" is correct, as interest represents one of the fundamental ways that revenue from capital gets distributed between lenders and borrowers. This aligns perfectly with Smith's analysis of how different forms of income are allocated in the economy.

## vsm_relevance — 2.0 / 5.0

Interest as a financial mechanism operates across multiple VSM levels without naturally belonging to any specific system—it affects operations (S1), coordination (S2), and strategic decisions (S4). This makes it largely VSM-neutral rather than having a clear systemic home.

## explanatory_value — 4.0 / 5.0

The entity illuminates an important structural mechanism in Smith's economic theory—how capital generates returns through lending relationships and profit-sharing between lenders and borrowers. It reveals the derivative nature of interest income, adding genuine explanatory power to understanding capital flows.
