Re: [Pen-l] What is the Crisis About? Fictitious Capital or the Destruction of Wealth?

["Anthony D'Costa" <promothesdcosta@xxxxxxxxx>]

India's richest men lose billions.  Fictitious capital or wealth destruction?

http://news.bbc.co.uk/2/hi/business/7938646.stm

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Anthony P. D'Costa
Professor of Indian Studies and Research Director
Asia Research Centre
Copenhagen Business School
Porcelænshaven 24, 3
DK-2000 Frederiksberg, Denmark
Email:ad.int@xxxxxx
Ph: +45 3815 2572
Fax: +45 3815 2500
http://uk.cbs.dk/arc
www.cbs.dk/india
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On Wed, Mar 11, 2009 at 5:04 PM, michael perelman
<michael@xxxxxxxxxxxxxxxxx> wrote:
> This short essay briefly describes the financial side of my interpretation
> that the crash reflected a disconnect between the underlying investment in
> the economy and its financial representation -- what Marx called fictitious
> capital.  The stock market people call this realignment, "destruction of
> wealth," even though what is destroyed is the illusion of wealth.  The
> illusion may have been capable of purchasing valuable things so long as
> other people accept that illusion.
>
> Long ago people accepted the illusion as an illusion and went on with their
> business.  Here is what a former governor of Illinois wrote:
>
> Ford, Thomas. 1854. History of Illinois (Chicago: S. C. Griggs and Co.).
>
> 227: "Our Whig friends contended that the continual and violent opposition
> of the democrats to the banks destroyed confidence; which, by-the-bye, could
> only exist when the bulk of the people were under a delusion.  According to
> their views, if the banks owed five times as much as they were able to pay
> and yet if the whole people could be persuaded to believe this incredible
> falsehood that all were able to pay, this was 'confidence'."
>
> Ordinary people understood what was happening.  Here is an incident from
> Chicago about the same time.
>
> More at:
>
> http://michaelperelman.wordpress.com/2009/03/11/what-is-the-crisis-about-fictitious-capital-or-the-destruction-of-wealth/
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA
> 95929
>
> 530 898 5321
> fax 530 898 5901
> http://michaelperelman.wordpress.com
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