Re: AUT: Re: Immeasurable value

["Harry M. Cleaver" <hmcleave@xxxxxxxxxxxxxx>]

On Tue, 30 Mar 2004, Doug Henwood wrote:

> Harry M. Cleaver wrote:
>
> >I haven't read the debate on ficticious capital that you are refering to,
> >but with respect to your last question I would say the following: the
> >notion of fictitious capital requires the ability to make a quantitative
> >comparison between the actual quantity of value and the quantity of value
> >ostensibly represented by things like stocks and bonds. You have
> >fictitious capital when the later exceeds the former as a result of
> >phenomena such as speculation. If you give up quantity as Toni does with
> >his assertion of the immeasurability of value then such a notion becomes
> >unsustainable. If you are content to work only with money as value you
> >could still do what some economists do, namely compare paper monetary
> >values with estimated real asset values and you could designate any excess
> >of the former over the later as amounting to "fictitious capital" - but of
> >course you would be giving up everything Marxist theory helps us to see
> >beyond/behind and within such surface categories.
>
> I thought all paper assets were fictitious, in that they represent
> claims on SV - or in monetary terms, claims on profits or interest -
> unlike "real" capital, which actual workers actually work with. On p.
> 595 of the Vintage edition of Capital III, Marx says that fictitious
> capital is created through the process of "capitalizing" an income
> stream - e.g., a government bond, which is a claim to a series of
> fixed interest payments.

Paper assets are no more fictitious than paper money if they represent
real assets. To the degree that stock, for example, represents ownership
of some share of a companies assets it does not represent fictitious
capital anymore than paper money, to the degree that it can actually be
exchanged for commodities, represents fictious value.  Many paper assets
may give a claim on the flow of income into that company and clearly any
claim on future income can not represent existing value. Indeed invested
"capital" (e.g., factories built, machinery installed, workers hired) is
fictitious until it actually produces surplus value. But that
wasn't Marx's concern when he used this term.


>
> Elsewhere in the volume, Marx implies that for stocks, what we would
> call today the excess of market capitalization over underlying book
> value (which is what Harry says here). But stocks are valuable only
> insofar as they are claims to a stream of future profits, so in the
> sense they are capitalized, even stock selling at or below book value
> is "fictitious" in that sense.

You overstate I think. Ownership of 100% of a company's stock (actually
far, far less than that) gives ownership/control of a company and its
assets/real-capital does it not?

Marx's interest in fictitious capital, as I understand it, derived from
the contradiction he saw between the way credit/claims allowed capitalists
to overcome a variety of barriers, yet at the same time, the "overcoming"
was always tentative. A stock sale allows a company to raise money for
investment and not wait until the individuals doing the investing are able
to earn enough money to carry out the investment. But then the ownership
and claim on those investments lie in the hands of those who hold the
stock. This is real. But what Marx saw all around him was how those paper
assets could then be bought and sold quite independently of what was
happening with the investments. He wrote a whole series of articles about
such phenomena associated with the Credit Mobilier in France that
purported to be the first French investment bank. (France was way behind
England in the development of such institutions.) In those articles Marx
follows how the founders of the Credit Mobilier were actually more
interested in speculating on the value of their paper than in carrying out
the real investments on which that paper was supposed to be based. So the
value of the paper grew much more rapidly than the value of the
investments and crisis was inevitable. So he generalized and saw how the
problems of credit multiplied with paper assets, how just as credit could
be drawn on credit (and the money supply expanded beyond the value in
circulation) so could the value of paper be bid up way beyond the value
that paper actually represented. Thus fictitious.

>
> Doug
>
>
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>

............................................................................
Snail-mail:
Harry Cleaver
University of Texas at Austin
Department of Economics
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Chiapas95 homepage:
http://www.eco.utexas.edu/facstaff/Cleaver/chiapas95.html
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