Re: AUT: Re: fictitous capital

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

On Tue, 30 Mar 2004, Doug Henwood wrote:

> Harry M. Cleaver wrote:
>
> >Paper assets are no more fictitious than paper money if they represent
> >real assets.
>
> I don't like reading Marx as scripture, but to him, paper money was
> fictitious: "Even assuming that the form in which loan capital exists
> is exclusively that of real money, gold or silver - the commodity
> whose substance serves as a measure of value - a large portion of
> this money-capital is always necessarily purely fictitious, that is,
> a title to value - just as paper money."
> <http://www.marxists.org/archive/marx/works/1894-c3/ch32.htm>.

Doug,
Look, in the passage you quote - which comes from a discussion of loan
capital, i.e., money loaned for use as capital, Marx is saying what I said
about credit: namely that until it has produced a surplus value it's
existence as capital remains to be proven. In fact, further down in the
paragraph he says this: "nevertheless the accumulation of these claims or
titles as such differs from the actual accumulation from which it arises,
as well as from the future accumulation (the new production process),
which is promoted by the lending of this money". Conceptuallly, this is
no different than saying that money is not money (even if gold) until it
has actually metamorphosed into a commodity through expenditure and thus
become exchange value. This is different, as I said, from the concept of
fictitious capital as a paper asset that doesn't actually represent (is
exchangeable into) the assets that it purports to represent because its
value exceeds that of the assets it supposedly represents - and he
discusses the rise of paper assets and speculation on them in the very
next paragraph. If you insist on using the term fictitious capital for
both situations, then you must differentiate between meanings. I think
Marx is being sloppy here in the use of the term "fictitious" but not in
the analysis.

>
> >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?
>
> Far less can give control, yes, but for smaller amounts the situation
> is more ambiguous. Stocks are residual claims; if a firm is
> liquidated, they're at the back of the line, after all the creditors
> are paid off. Under U.S. law, in return for limits on their liability
> (they can see the value of their stock wiped out, but the rest of
> their assets can't be attached), shareholders give up the right to
> dispose of corporate property on their own; they can sell the shares,
> but not the firm's assets. Groups of shareholders can band together
> and try to change the managers, but that's easier said than done.
> Much of U.S. financial history over the last 20 years has been about
> trying to increase the power of shareholders - yet still Ken Lay
> fleeced 'em.

Sure, the same way the founders of the Credit Mobilier did back in the
1800s. Thanks to the financial deregulation of the late 1970s and since we
have been deposited back in the 19th Century.

>
> The real reason people buy stocks is because they're claims to a
> profit stream, which is then capitalized. So we're back at the quote
> at the top - shares are titles to value, but not "value" itself. Now
> we can play some interesting games about how some kind of money are
> realer than others - there are good reasons why gold has been the
> form of money par excellence over time, but it's still a social
> convention.

Clearly some people buy stocks to claim a share of a profit stream, either
now through dividends or later through the increased value represented by
the stocks. Others buy stocks to speculate, not on the size of future
income streams but simply on the likely rise in the value of the paper
which may be due to successful investment or may just be a speculative
bubble.

Strictly speaking in Marx's analysis value takes the form of money,
commodities, mobilized labor power and utilized means of production. Money
that has no value, because not produced by labor (or at any rate not
produced to a significant extent - even paper money and electronic money
take some small amount of effort to produce) is still "real" if it
represents value and passes through the various phases of existence that
make money money, or money capital. Money becomes capital, regardless of
its form when it mobilizes factors of production and produces commodities
on which a surplus value is realized.

H.
>
> Doug
>
>
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>

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Harry Cleaver
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