ECONOMICS - 'FICTITIOUS CAPITAL' : FROM ORIGINAL INTENT TO HYPER-INFLATION
capital’ : from original intent to hyper-inflation
WHAT MARX WROTE
Let us begin with a reminder of how to approach Marx’s thinking from the person who knew best. Frederick Engels pointed to an error which has become as common among Marxists as it was among bourgeois scholars who assumed
An epilogue on ‘Dialectical Reasoning’ draws on the distinction between relative knowledge and absolute truths.
the fictitious follies
would not have been surprised: ‘It is truly wonderful how in this
credit gibberish of the money-market all categories of political economy
receive a different meaning and a different form’.
The following four examples show that this wandering is no longer
confined to the vulgar political economists.
an instance of ill-considered pronouncements, the On-line Encyclopedia
of Marxism: Glossary of Terms states that ‘fictitious capital’
The first weakness in this version is that ‘speculation’ is an odd term out since it is not any kind of financial instrument. Speculate is what you can do with the other four forms.
Secondly, ‘fictitious’ is presented as value ‘above and beyond what can be realised in the form of commodities’. This account would have tickled Marx’s fancy as much as did Balzac’s miser, Gobseck, when he enters his second childhood by no longer hoarding gold but ‘begins to pile up commodities’, a true madness. Furthermore, confining realisation to ‘commodities’ leaves us wondering what has happened to money, that universal equivalent of labour-times, that alpha and omega of capital’s expansion. The identification of real capital with commodities is Marxist only if the author treats money as a commodity. The Glossary’s focus on commodities swivels on a misreading of Engels’s account of the 1840s. (Section 4) Thirdly, the Glossary misses a recurrent element in Marx’s writing about fictitious capital, namely, capitalised rates of interest on government bonds, shares, ground-rent and chattel-slaves. (Sections 7, 8, 13 and 14)
Harman’s Glossary to his 2009 Zombie
Capitalism crams too little into its definition:
The insouciance of ‘things like’ is followed by examples that mention no kind of capitalised income. His view of real-estate investment is lop-sided since such outlays are part of the production process of surplus value in their construction stage though not if existing properties are purchased; he has followed David Harvey in forgetting the primary circuit of capital. He is right to source rents or dividends to surplus value but should have inserted that they do so only indirectly.
In 1987, the erstwhile editor of Monthly Review, James O’Connor, defined fictitious within the difficulties of realising surplus value because of its expropriation from the wage-slaves who produce it. He misrepresented the resultant gap as arising from an ‘insufficient demand for commodities’ rather than from their over-production. The gap between their over-supply and effective demand for them, he observes,
In considering productive capital, he rightly goes beyond the equation of fictitious with commodities. His account, however, is well nigh impossible to square with any form of capitalised income. Moreover, capitalised incomes from shares, land or chattel-slaves stand in a different relationship to productive capital than do interest payments from government bonds. The latter show that fictitious capital need not be in circulation.
A lengthy statement in the Glossary to the 2009 symposium on the crisis in Historical Materialism deals only with stock prices, and is reprinted in footnote 50.
Parasites, high and low
Parallel weaknesses are found among knowledgeable Marxists. For instance, David Harvey speaks of ‘a conflict between finance and production capital’ but fails to specify either. From his subsequent remarks it seems that ‘production capital’ is ‘industrial’, which is correct if ‘industrial’ covers agriculture, construction and transport. It is not clear whether he wants us to treat production capital as productive of surplus value while finance, by its nature, lives off the profits realised therefrom. At one point, he alleges that ‘Wall Street finance connived at the de-industrialisation of the United States’ but later corrects this moralising to say that the rise of finance ‘facilitated the de-industrialisation in traditional core regions’. In Harvey’s 2010 lecture, his sole mention of ‘fictitious’ is the ‘creation of fictitious capital markets’ that drove up the leveraging ratios of banks.
Drawing too sharp a line between the forms of capital is some of what Marx labeled as vulgar political economy. Financial capital is essential to the expansion of the industrial, in ways he spent twenty years specifying. He spurned the prejudice that the financial forms of capital are merely parasitical on the industrial kind. Bankers’ hoards contribute to the expansion of real capital:
In so doing, credit goes beyond financing individual capitals to servicing aggregate capital, which is the object of Marx’s critique of political economy.
Moneyed-capitalists and industrial capitalists, Marx writes, ‘are in fact co-partners, one of them being the juridical owner of the capital, and the other, while he employs it, the economic owner’. He is at pains to integrate interest payments into the profit that can come only from the surplus value that is added through the valorisation phase of the production process. Production-capitalists separate interest from profit in their minds because, as debtors, their payment of interest encourages them to view their loans as commodities. Not surprisingly, ‘illusory, fictitious capital’ nourishes greater absurdities than is usual among capitalists and their apologists, as we shall see in section 15 on ‘Ideology’. For the moment, it is enough to recognise that these misapprehensions are not delusional but serve a purpose.
Marx also recognised the benefits to the expansion of capital from a market in futures since they provide payments to producers from merchants in advance of the consumption of the commodities:
In the final chapter of volume II, Marx integrates the advantages from credit and futures-trading into his account of the reproduction of aggregate capital on an expanded scale.
In addition, Marx acknowledges the contribution that even speculators make to recovery after a bout of de-valorisation:
Despite Marx’s acceptance of the contribution of financiers and crooks to the accumulation of surplus value, he cared no more for Mr Moneybags than for Mr Glass-blowing Capital. Yet, he could not deny the utility of financiers and certain swindlers to the growth of individual or aggregate capital.
Hence, far from always sapping the life out of productive capital, financiers can help to restore its vigour. For instance, early in the twentieth-century, J Pierpont Morgan ‘Morgan-ised’ US businesses from the incompetence of their founding entrepreneurs. He explained that once he had redeemed a firm he felt ‘morally responsible for its management to protect it, and I generally do protect it’. A more recent case was the rescue of Swiss watchmakers by a syndicate of investors headed by Nicholas G Hayek who, from 1985, sorted out the account-books of horologists and coined the brand-name Swatch. The role of money-men, therefore, is not confined to the asset-stripping made notorious by the 1987 leveraged management buyout of Nabisco documented in The barbarians at the gate.
Of course, not every financier contributes to real capital all of the time. Recently, all manner of capitalists have yet again been overtaken by the fever to make money out of money (M-M’) without the bother of selling commodities, let alone producing them, as Engels observed. For Marx, M-M’ was a ‘ meaningless condensation’ which encouraged capitalists to congratulate themselves on producing the increment without the intervention of labour. That is impossible. Every swindler needs other capitalists to have gotten down and dirty in the expropriation of surplus value.
Marx – and Engels - said
XXV in Volume III of Capital
is entitled ‘Credit and Fictitious Capital’. The term
‘fictitious’ appears only three times, twice in the first quotation
from a Yorkshire banker and in a bracketed footnote inserted by Engels.
Chapter XXIX, on ‘Component Parts of Bank Capital’, contains
more of Marx’s uses of ‘fictitious’ or its cognates than the rest
of the four volumes. He uses fiktiv
ten times and illusorisch
seven times. Arriving at his original intent is not helped by
translators going their own ways: Chicago has ‘fictitious’ thirteen
times and Moscow twelve but Penguin follows Marx with only ten. All give
Schein as ‘illusion’ when
it is closer to pretence or sham.
The German title for chapters XXX to XXXII is ‘Geldkapital und wirkliches Kapital’, which the Moscow and Penguin editions both render as ‘Money Capital and Real Capital’. The Chicago edition put ‘actual’ in place of ‘real’. To complicate matters, two lines down from the title, Moscow offers actual for ‘wirkliches’. Penguin slips around that repetition by talking of ‘money capital as such’, though in the next line it gives ‘genuine’ for ‘wirklicher’ while Moscow continues with ‘actual’.
To sort out what Marx and Engels understood by ‘fictitious’ we need to know what they meant by ‘wirkliches’/‘real’ capital. For them, real capital was, first and foremost, productive of surplus-value. Other kinds of capitals expand through the revenues that their agents extract from the profits realised out of surplus-value. In truth, surplus-value is the touchstone for what is and is not fictitious. That rule is explicit in Marx’s exposition of ground-rent as capitalised revenue in a chapter headed ‘The Transformation of Surplus Profit into Ground Rent’. ‘Surplus Profit’, he adds, is profit above its average rate, though both derive from the realisation of surplus-value. (see Section 14).
Real, actual and genuine are not synonymous in the senses that they convey to an English reader. Real suggests the palpable, more than an appearance; actual is what exists against some ideal form; and genuine has a hint of honesty, not a fake (Shein). These nuances gain pertinence when we track the connections and differences between capital as things and capital as processes. Thing evokes objects as extensions in space, while we visualise processes as temporal rather than spatial. This distinction is significant for our discussion of fictitious least anyone assume that real capital has to be thing-like. Capital is neither just a thing nor even a set of processes but rather involves things undergoing processes of transmutation in and out of the money form.
juxtaposition of ‘Money Capital and Real Capital’ implies that
money-capital is not ‘real’. If money-capital is not real, is it
always fictitious? If no money capital is real, how can Marx take it as
the starting point for his account of capital’s expansion? The answers
require delving more deeply into Marx’s accounts of the relations
between money and capital than is possible here.
Suffice it to say that money becomes real capital only when it is
contributing to the latter’s expansion: ‘Thus in capital the
independent existence of value is raised to a higher power than in
Money-capital is not real capital because you can touch it. For instance, a miser’s hoard of gold coins is not real capital since it has not been thrown into the circuits of capital expansion and so can never be engaged in the production of surplus-value. The miser’s hoard will become real capital should he come to his class sense and advance it to an industrial capitalist to invest for the expropriation of surplus-value. In contrast to a miser’s hoard, the hoard of an industrial capitalist is real capital because it is being stored in order later to expedite the turnovers of capital for its expansion. (Section 9)
Engels as editor
Engels confessed that he had failed at three attempts to fashion a version which ‘would at least approximately contain everything the author had intended’. The impossibility of this approach caused him to put the materials into the best order he could while ‘making only the most indispensable additions … Chapter XXV and XXVI required a sifting of the references and an interpolation of material found elsewhere’.
To become more confident of Marx’s intention we need to unstitch Chapter XXV where, ‘fictitious’ makes its debut in the title though is nowhere from Marx’s hand. Marx made no claim to having coined ‘fictitious’, which Thomas Jefferson had used in 1819 and Engels in 1845. Marx’s contribution is the significance he gives to fictitious in his exposition of money and capital. The thirteen pages of this chapter contain only three from his pen. Eight were copied from other books, newspapers and reports, with brief introductions which give a flavour of his reactions. The extracts deal with banks. The first, from 1840, by a Yorkshire banker mentions ‘fictitious’ twice:
This author is not dismissing all credit as an illusion, any more than did Marx who understood that an ever-expanding volume of commodities and their widening sphere of realisation depends on more credit being available than there is gold in the vaults. The circuits are kept turning by settling exchanges with money-of-account as book-keeping entries. The subsequent extracts in chapter XXV deal with bills-of-exchange as the foundation for credit.
‘Capitalisation’ is one way in which Marx identifies what is fictitious. ‘A title to value’ is another definition of ‘fictitious’ in regard to capitalisation. He applied this precept to government bonds, to shares and to bills of exchange. (see Sections 7, 8 and 12)
To complicate matters, Marx sometimes uses ‘capitalisation’ as a synonym for accumulation, for example, ‘the capitalisation of surplus value’ and ‘the snatching of surplus-value and its capitalisation, i.e., accumulation’. This sense of ‘capitalisation’ is the direct opposite of the capitalisation of rates of interest. The former gathers surplus-value for the expansion of real capital: the latter expects to live off surplus-value already secured elsewhere, as is blatant for government bonds.
After a while, the sham was kept afloat by advancing credit before manufacture, and no longer just before sale. Engels explained:
This fiddling was an effect of over-production and not an autonomous financial upset leading to crisis.
In Engels’s recounting of the craze, the only appearance of ‘fictitious capital’ is in a footnote which he added about how the telegraph and steamboats through the Suez Canal had put an end to this ‘method of fabrication’, rendering it ‘totally impractical’. He did not name the advances on unsold goods as ‘fictitious’. We are left to impute that their value is ‘fictitious’ because he put his discussion of them into a chapter headed ‘Fictitious capital’. Materials in later chapters of volume III validate the connection.
Marx’s own remarks about fictitious capital begin from the funds that are placed with governments to derive interest out of the taxes levied to service the national debt:
He thought such investments fictitious because they could not add value. The funds had gone to the state to cover its debts, not to expand real capital.
Had the tax money been advanced to a manufacturer, it would have become real capital by engaging in the production of surplus value. The same applies had the bonds gone to a state-owned enterprise where the wage-slaves generate more value to increase its money-capital, as used to be the case with QANTAS. Indeed, some of the value added by QANTAS workers for a statutory corporation contributed to those interest payments on government bonds . Nowadays, the airline expands its capital as a share-holder corporation. Its shares become fictitious as a shadow of the capital invested in self-expansion. Some its tax payments end up meeting interest charges on the ‘fictitious’ capital that are government bonds. In neither circumstance do the earnings on QANTAS shares fulfill the criterion of incomes from taxes.
Once plant and equipment are represented by tradable shares, they attract a fictitious ‘value’. Marx stresses the difference between value and the market-price of shares as ownership titles to real capital:
That volatility happens because the shares ‘become commodities, whose price has its own characteristic movements and is established in its own way’. Over the longer term, the sale price of a share will gyrate around the dividends that the investment yields. That return will affect the volume and price of stock-exchange bids:
The ‘speculative’ part is not necessarily a swindle but refers to the expectation of earnings.
Marx acknowledges grades of fictitiousness by reminding us of the manner in which
Money-capital does not become ‘purely fictitious’ once it is advanced for enterprises generating surplus-value. For as long as the share price is matched by an equivalent value in operating stock, the paper-token is not ‘purely’ fictitious.
Such connections pose the problem of determining which part of the value of shares is not purely fictitious, and why:
This sentence is puzzling because the basis of this promissory note is not ‘purely illusory’ yet its value is ‘pure illusion’. The tension is resolved once we distinguish real capital from its paper representations. For instance, the capital embodied in a serviceable QANTAS 767 is in no sense ‘purely illusory’. It is the capitalisation of a rate of return on the investment in QANTAS-share certificates that is fictitious.
Should an aircraft have to be pulled from service, then the fixed capital embodied in it will not be available for the addition of value, and the share price liable to decline.
To see how this happens, we need to follow how the value placed on shares in a corporation which is accumulating surplus value nonetheless prove fictitious. Let’s track a dollar invested in such a firm. The moneyed-capitalist buys a one-dollar share which is matched by the value of real capital in plant and stock that allows for the addition of value. That share certificate ‘does not represent purely illusory capital’. The tokens represent real capital but are not themselves real capital.
For the moment, we shall follow Mr Money-capital as he sells his shares above their issue price. We postpone any thought of a fall in the share price. He thrills when his one-dollar share trades at two dollars. The original share has lost its connection with representing the value of the plant and stock. Indeed, the one-dollar token turned fictitious the instant its nominal value lost parity with the value of the real capital by rising to 101 cents. However, if a portion of the profits is reinvested but no more shares are issued, the token and the real continue to match each other and no fictitious capital is represented. Once that equation is breeched, the extra price offered for the share becomes purely fictitious as a capitalised rate of interest.
Whatever happens to the market-price of a share, Marx reminds the paper millionaire:
The matter may end there in terms of the expansion of real capital, but not in the minds of an investor who now owns the shares. We cannot expect Messrs Speculator to appreciate that value exists only once. There is ready money to be gathered by gambling with the share-tokens as chips at the world’s biggest casino, the stock market which is, as Warren Buffett reminds us, a voting machine, not a weighing machine.
first trade of a one-dollar share at two dollars will be followed by an
avalanche of illusory revaluations as all the investors in that company
apply the latest market-price for a single share to all their holdings.
They dream that they all have doubled their money. They might learn
otherwise should they all try to sell all their shares at the same time.
Some will get first-mover advantage by selling ahead of the pack. All of
them can get that extra dollar only if the firm is taken over at a
premium, as just happened with Skype. In that case, the money they
receive for their shares can become latent money-capital before being
re-invested in a process productive of surplus value. Once on the
market, the shares in that new firm again represent degrees of
fictitious value, the more so for investors who buy in later at
The gap between the likely dividends and the speculative price placed on a stocks became blatant in mid-2001 when a broker returned $1.73bn to his clients, telling them that
He adopted this high moral stance only after the Dodd-Frank Act held him liable for certain losses.
The investors’ delusion that they possess two capitals is sustained by the fact that, in a rising market, they have two streams of income. In addition to six-monthly dividends on their real capital, they can make capital gains by selling off portions of made portfolios of fictitious capital in shares:
Marx again cautions the capitalist that
Marx exorcises this doppelganger by delineating the hoards held by industrial capitalists from those of bankers.
The purposes of these savings include (a) to replace equipment; (b) to maintain a continuous flow of materials and labour-power; and (c) best of all, to do both on an expanded scale.
The constituent parts of an industrialist’s hoard can be both ‘purely fictitious’ and potentially real:
This accumulation is fraught with extra risks before the latent money-capital can be exchanged for real capital: ‘during crises and during periods of business depression in general’, fictitious capital ‘loses to a large extent its capacity to represent potential money-capital’. That loss leads our investors away from the happy days when they could suppose that they had landed two capitals for the price of one. A crisis looms.
In these circumstances, aggregate capital lurches towards a rupture in the circuits of its expansion. Now, the price on the tokens tumbles even more,
A systemic crisis is not inevitable at each blockage although there will be some under-tow towards a general collapse because of the contraction of credit.
In the wake of the 2007 implosion we are experiencing a double whammy. An excess of money-capital is sloshing around but unable to find a profitable outlet or can do so only at a rate of interest which is too steep to yield the average rate of profit. Interest rates are being forced up to match the heightened risk from still undisclosed insolvents and to improve liquidity for the banks after their bad debts. The so-called Greek crisis is but the rupture point for this system eruption.
A collapse in fictitious value of the shares will be as disproportionate to real capital as was their rise from parity:
These falling share prices express a negative fictitious value. Fewer and fewer capitalists can secure their usual lines of credit and hence are made insolvent even when profitable. They are thereby cornered into dodges such as trading while insolvent, or a Chapter-11 bankruptcy in the US of A, which is much the same.
A share price will almost always represent some fraction, no matter how tiny, of the real capital in which it has been invested. The exception is where the business is a fraud with no more real capital than an email address for receiving investors’ funds to steal. That scam is but the crudest of swindles.
It did not take the genius of a Marx to know that the trading of shares in firms accumulating surplus-value never precludes their real capital from being caught up in swindles. Moreover, share prices, he writes, fall ‘partly as a result of the spurious [Schwindel] character of the enterprises that it often enough represents’.
Not all swindles are associated with fictitious capital and not all fictitious capital or values result from swindles. Nonetheless, the fictitious allows more scope for swindling. Although Marx scorns the slogan that property is theft, he regularly spotlights swindling, a strand neglected by Marxists. Swindles among capitalists are ever present in their scramble for slices of such profit as can be realised after expropriating surplus value.
The crux of Marx’s advance on Smith and Ricardo is his discovery that the exploitation of workers is not a swindle. On average, labour-power is paid for at its value, that is, the combined labour-times that went into its re-production. The workers are not paid for the values they add beyond that wage. In addition to capital’s holding onto the results of this unpaid labour-time, capital aims at zero labour costs. Its agents, therefore, cheat on hours, wages and entitlements. On top of expropriating surplus-value and underpaying their workers, capitalists over-charge and adulterate consumer goods to claw back a portion of the wages.
Capitalists cheat each other in order to grab a slice of the surplus value expropriated by their suppliers or corporate customers. Dick Pratt’s price-fixing is one example of the intersection of these inter- and intra-class swindles. This second layer of exploitation is possible because production and consumption are wound together in the social metabolism of capital expansion.
A higher form of swindling follows from the need to sustain continuity in the productive process. Capital must have a ceaseless inflow of funds. Most wages are paid weekly. Invoices for production commodities fall due at different dates in each month. The formula money-commodity-more money (M-C-M’) is misleading in as much as it seems that all the money enters at the start of the production process. Rather, some money has to be available everyday and not just on the first morning. Capitalists tide themselves over by on-selling invoices for goods which have not been paid for by those who will consume them as use-values. This bridging finance institutionalised the advances gained from the China trade in the 1840s. Even then, they were known as bills-of-exchange.
The operation spins out of control. Marx quotes a banker from 1858 to show how one torrent was undammed:
This testimony reports an embryonic form of speculation in financial instruments, one with only two degrees of separation from the production of surplus value. During the past thirty years, such trading entered the stratosphere, with derivatives and collatoralised debts at ten times the monetary value of the world’s Gross Domestic Product. That magnitude was beyond the wit of a even a Warren Buffett to profit from packaging and reselling debts over and again.
Here is what happens on an average day. Invoices go forth. They are discounted. As a result, the producer has got back his costs plus surplus value. Yet, his firm gets no further orders until his wholesaler has got rid of last year’s stock:
But as soon as the commodities lying in the reservoirs of circulation do not make room for the swiftly succeeding wave of production, so that the reservoirs become over-stocked, the commodity-supply expands in consequence of the stagnation in circulation just as the hoards increase when money-circulation is clogged. It does not make any difference whether this jam occurs in the warehouses of the industrial capitalist or in the storerooms of the merchant. The commodity-supply is in that case not a prerequisite of uninterrupted sale, but a consequence of the impossibility of selling the goods.
Typically, a mechanism invented to facilitate growth has twisted into a device which compounds the crisis.
One perplexing consequence of on-selling invoices is that a collapse can be underway while everything seems rosy:
Capitalists of every stamp now compete to swindle their way out of bankruptcy. They stampede to unload invoices at a discount in the hope of getting enough cash to hang on until the cycle picks up.
Marx specifies three forms of fictitious capital held in a banker’s reserve funds, most of which
consists of claims (bills of exchange) and shares (drafts on future revenues). It should not be forgotten here that this capital’s money value … is completely fictitious even in so far as they are drafts on certain assured revenues (as with government securities).
Each of the three components is fictitious in its own way. The first pair are caught up, again indirectly, in mechanisms to expand values while the third lives off taxes exacted from that process. For the moment, none is latent real capital because none is available ‘to be invested’ to add value. Any portion of them could be sold to release them for that purpose.
Despite the dreams of utopians, one can no more have capitalism without bankers than without money as the universal equivalent for labour-time. Indeed, bankers perform an essential role by assembling the funds for the expanded reproduction on which capital depends for its existence. Providing this service cannot separate productive capital from its fictitious shade. Later on, Marx observes:
Marx explores how bankers extend their services beyond holding fictitious capitals to how they go about adding to them.
The degree to which a banker’s hoard is fictitious is related to its liquidity, that is, the ratio of a bank’s reserves to its loans:
Engels explains that the
By 1893, Engels had observed the sophistication of the stock exchange and banks during the twenty-five years since Marx had drafted his chapter on banking capital.
It is unheard of for banks to hold a quantity of gold to equal the quantity of their loans, that is, to operate on 100 percent liquidity. Capitalism could never have come into existence had they done so. This impossibility is a reminder that credit and several of the forms of fictitious capitals are essential to the expansion of real capital and are not always a drain on it. That contribution applies whether the credit is advanced by Westpac to a particular firm to expand its production or by the Reserve Bank to stimulate aggregate capital.
Non-monetary forms - ground-rent and slaves
capitalised rent is fictitious capital because it is not engaged in
adding values though it rests on their extraction. Marx spent 220 pages
explaining how the mechanisms by which ground-rent is secured differ
from other kinds of capitalised rent, though all are interest-bearing
Marx does find a parallel between ground-rent and government bonds, the form in which he had introduced fictitious capital 350 pages earlier:
What they have in common is their capitalised rates of interest.
Marx went straight from demolishing an ‘insane’ attempt by capitalists to represent wages as interest earned by workers on the investment of their labour-power to reminding those gentlemen that this subterfuge had a parallel in chattel-slavery where
That the chattel form of slavery differs from wage-slavery is central to Marx’s analysis of capital. In the present discussion we also have to distinguish the chattel-slaves who work for their owners from those who are hired out. In every case, they are variable capital, that is, they produce more values than went into reproducing their capacity to add value. The purchase of a chattel-slave, like the acquisition of farm land, will return no rent unless profit has been realised on surplus value:
Whether under chattel-slavery or wage-slavery, capitalised interest is fictitious capital because it is not adding value.
When Marx discusses the place of a waterfall in manufacturing, he uncovers ‘a hidden, a real economic relationship’, which further illuminates his presentation of fictitious capital as capitalised rent:
Monopoly power over a natural resource allows for the extraction of rent. Capitalised income results from a social relationship of class rule, whether over a gift of nature or the chattel-slave.
The landlords’ receipt of ground-rent as capitalised income is one fount of mystification:
ideological response to the purchase of chattel-slaves is ‘exactly the
Here, bourgeois individualism disowns the social formation that gave it birth to pretend that there is only an exchange of cash for a thing, whether land or a chattel-slave. Marx reminds the Robinsonades that there was no slavery in Crusoe’s domain until Man Friday appeared. No one is born a slave. People are born or forced into slavery.
Marx’s approach to interpreting class-based interpretations of the world has an added relevance to fictitious value. For a start, that sham will multiply illusions about the expansion of real capital:
Confronted with the fictitious, the vulgar economists outdo each other in propagating the trite and the banal:
spotlighting such tautologies, Marx traces a decline from the peaks of
classical political economy to the flatland of marginal-utility
The absurdities in the capitalists’ account of their own doings as the personifications of capital are made many times more ludicrous. The spread of fictitious values throughout capital expansion doubles the deceit that disguises the historical nature of class rule as if it were eternal and its social basis as natural as breathing: Luft macht eigen (the air makes the serf).
Criticising the ideological dimension of fictitious is essential to penetrating its actualities:
Marx laid out why
In carrying his critique from the concept of the value to the surface of market- prices, Marx never abandoned the quest for the reality of the latter. Prices are on the surface but are not just an appearance. Similarly, fictitious capital is not confined to the surface of the circuits of capital but is intertwined with its expansion. What has become ever more superficial are the distortions peddled in Schools of Business about every element in that synthesis. When catastrophe struck in 2007-08, the world was being run by people with PhDs proving that it could never happen.
Since the preceding pages have rarely strayed beyond unraveling what Marx and Engels wrote, the remainder of the essay can be only a starting place for understanding how fictitious capital meshes with the expansion of real capital today. Four lines of inquiry will be introduced:
The concluding pages open up these areas for dispute, with no suggestion that they are equally important, or more so than others unnamed.
As resolutely as we have to proceed with Marx beyond expropriation, we must keep sight of them when considering the fictitious. Without the anchors of wage-slavery surplus value, we will slide towards swindling as the explanation not only for fictitious capital but also for the expansion of real capital. Swindling is important in the redistribution of profits among capitalists but marginal to expropriating the surplus-value from which profits are realised and rents allocated. Vital as it is to attend to those Marxists who are on top of monetary systems and financial instruments (Hilferding, de Brunoff, Bryan and Rafferty), one cannot be any kind of Marxist if one forgets that dispossession and exploitation are at the root of every upheaval.
This trio offers opportunities for cooking the books. Buffett accuses creative accountants of ‘drawing the bulls-eye around the arrow’. (see Missile on ‘Adding MacValue’) Accountants for Mass Murdoch provided iconic instances of ‘now-you-see-it/now-you-don’t’ when, to avoid tax, one News Ltd subsidiary in 1996 had a capital of $190 but carried debts of $4.16bn while being owed $2.95bn by other subsidiaries.
Even in combination, these three book-keeping twisters are as nothing compared with the challenge that neo-Classical economists face over the distribution of income between ‘profits’ and wages when they try to reckon ‘capital’ in the same unit as they measure the others. Their brightest and best spent decades trying to evade this circularity before deciding that silence was the safest defence for their ‘logically insecure’ treatment, a censorship which they have perpetrated on generations of unergraduates. Marxists know that the distribution of income is decided by the balance of class forces. In the sense that capital-within-capitalism is a power relationship, all its economic guises might be deemed fictional.
Hedging is also an insurance which allows the manufacturer to buy an input in advance of purchase to avoid price hikes or, at least, to be certain of forward production costs. QANTAS did well by its forward purchases of aviation fuels. Managers also hedge on the costs of the money-capital they borrow from bankers’ hoards, thereby betting on shifts in the rate of interest for loans and overdrafts. This hedging facilitates the expansion of individual capitals, and perhaps of aggregate capital, if it accelerates turnover times.
The hedging of commodity prices paved the expressway to hedging the price of the foreign currencies in which firms pay their bills. This variant spread following the abandonment of the dollar standard in 1971 to be expedited after currencies were floated in the 1980s. The change was phenomenal. In 1985, the daily turnover of futures contracts in Australia was $100m. By 1999, it was seventy times as large, or $7 billion. If we add the futures market to the share, foreign exchange and money markets, the total trades here hit $50,000,000,000,000, i.e., fifty trillion. Speculators entered the money markets to bet on the direction in which exchange rates would go. George Soros sucked in billions as governments tried to prop up their currencies. As Europe spirals downward, its governments and banks strain and squabble to re-regulate global finances after they had conspired with gamblers to trash their copies of Hoyle.
Hedging is another zero-sum game. It cannot add value, but redistributes it. Founder of Bridgewater Associates Ray Dalio says of his recently launched fund, Pure Alpha Major Markets: ‘In order to earn more than the market return, you have to take money from somebody else’. Dalio, of course, cannot see that the losers had already taken their money out of the surplus value produced by wage-slaves.
J M Keynes pointed out in 1936 that capitalists would sometimes hoard their money in the hope of a speculative gain. Meanwhile, investment stagnated. To break out of what he called this ‘liquidity trap’ he recommended that governments spend more than they collect. He advocated ‘digging holes before filling them in again’ since this apparently wasteful expenditure produced a ripple-out effect (the multiplier) from each dollar added to the budget. Demand created supply. However, he was no less adamant that when an economy was booming, the government should reduce its outlays. If it does not, the upshot will be that, as O’Connor explains,
Instead of pulling back during booms, politicians and social reformers inflated Keynes’s adjustment mechanism into a machine for perpetuating growth in government spending. The budgets of OECD economies lurched towards the Peak Debt that is now helping to cripple accumulation.
Demand management: effective yet fictitious
Consumer credit from the 1950s installed a fictitious yet effective demand. Its continuation is as essential to expansion, as its unchecked growth is perilous. Increases in household debt have been staving off crises in over-production ever since capital escaped from the deflationary cycle of the 1930s by warfare spending. By the 1990s, consumer debt in the US imperium took over from the military-industry-academic-congressional complex as the prime counter-tendency to the TLRPTF. US outlays on the armed services fell from 52 percent of Federal spending in 1960 to 16 percent in 2001, and from 9.3 percent of Gross Domestic Product to below 3 percent, rising to just over 4 percent in 2003. Over those forty years, the number of weeks’ income after tax needed for the average household to pay off its debts went from thirty to fifty-two.
Household debt underpins mass marketing, or what Baran and Sweezy discussed as ‘the Sales Effort’, in which advertising is merely front of house for the empire of mass marketing. That process begins with the design of products for inculcating what its apologists pretend are our latent needs. Remortgaging the family home became another device for absorbing over-production until – as Brenner put it - the house became an ATM. Superannuation intended for retirement was turned into collateral for more consumption now. At each barrier to the realisation of surplus-value, the merchants of debt pushed further down the yellow-brick road until they were forcing sub-prime loans on people with zero credit-ratings. The crisis of 2007-08 spun out of this sales effort to deal with excess capacity.
The connections between state expenditures, consumer credit, fictitious capital and input-output flows await a fuller analysis. We need to chart the shifts in levels of debt between the state sector, the corporates and households, and track the shifts in their incidence between nation-market-states. Japan, for instance, has high levels of personal savings but the world’s third worst debt to GDP ratio.
Moreover, interpreting the phrase ‘fictitious capital’ is a tiny part of interpreting the world in order to change it. Getting the meaning of ‘fictitious’ wrong leads activists away from the exploitation of labour-power into moralising about greed and thus onto missteps in political practice.
Changes that benefit working people will never come without the yakka of interpretation. One is not possible without the other. Mindless militants incant Marx’s ‘Thesis Eleven’: ‘The philosophers have only interpreted the world in various ways; the point is to change it’. Those choristers remain deaf to the historical materialism at the opening of The German Ideology that makes sense of the scraps masquerading as ‘Theses’. (See Missile on ‘Thesis Eleven’)
Were Marxists to confine our contributions to the class struggle to exegesis, the dismissal of interpretation would apply. However, conceptual investigation, agitational writings and political practice form a loop in which each element nourishes the others to strengthen the proletariat, as demonstrated in the revolutionary lives of Marx, Engels, Lenin and Mao.
One instance of how a keener understanding of ‘fictitious’ has helped me is in summarising the weaknesses that the Chinese authorities acknowledge run through their economy, where the ‘fictitious’ gathers together statistical fraud, an under-valued currency, real-estate bubbles, bad debts, inflation and escalating bank liquidity. (see ‘Chinese Crackers’ and ‘China Update’ on surplusvalue.org.au) The great disorder under heaven from the boom set off by the 2009 stimulus package required Beijing in June 2011 to buy up $US463 billion in bad debts to banks from local governments. That bailout was half as big again proportionately as the 2008 one in the US. In addition, Moody’s estimated that local governments still had undisclosed debts of $540bn that the central authorities considered not to be real claims because they were ‘poorly documented’.
At the same time, the State Council tried to control inflation and the property bubble by driving the reserve requirements on banks over 22 percent before the end of 2010-11 financial year. Not surprisingly, bank lending shrank by 12 percent year on year to mid-2011 while the money supply (M2) grew by only 15 percent. Nonetheless, investment in the property sector increased by 35 percent. How did developers squeeze so much more money-capital out of somewhat less? One answer is that they used copper, aluminum and even steel as if they were gold bars in Fort Knox. Financiers found a way around the controls on liquidity, as is their wont, until
This method of securing funds poses hard questions about which of the forms taken by the capital during this metamorphosing are fictitious and which real. A store of copper is not real just because it is in metal bars, yet becomes real when it funds construction from which surplus value will be extracted. However, at least some of the valuation that the owners will put on those blocks of units and offices will prove fictitious until they can be rented at returns that bring an average rate of profit, which is not easy in the current over-supply.
My contribution towards clarifying ‘fictitious capital’ has been scholastic so that others need not start from base camp; the footnotes will allow them to check my reading and correct my version.
Above all, only by remaining attentive to how the current crisis plays out will any interpretation be put to the test of practice, the test that alone can identify errors of interpretation - whether of original intent, conceptual developments, new fictitious forms, or our political responses. The lessons from practice will not deprive us of the chance to make new mistakes. Hence, we should heed the advice of Engels on the gap between relative and absolute knowledge:
Advances within this asymptotic accumulation of understanding are marked also by zigs and zags.
Similar twists apply to the application of even our most advanced understanding to the natural world and to the social domain, as Engels warned:
That catch is also true for capital. Marx and Engels in 1848 saw that the success that its agents have in surmounting each crisis is ‘paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented’. However, capital is yet to encounter a limit which some of its lieutenants could not overcome. In the process of survival, every success has compounded some other problem until a long wave of adding to excess capacity has left fewer outlets through which capital can expand. Each rescue package to settle this or that manifestation of the present crisis in the accumulation of capital has failed in the medium term. Few nation-market-states can afford to repeat the stimulus packages of 2008-09. Australia will remain exceptional until a collapse everywhere else again shrinks China’s exports and thereby slashes sales of and prices for our dirt, provoking a budget crisis.
In dealing with this trajectory of chaotic competitiveness, the personifications of capital cannot shed their ideological blinkers about why it needs to expand, what is real and what fictitious, and how income is distributed. Protagonists of the proletariat still have a chance to learn the laws of capital expansion and thus how better to react against them. If not, the catastrophe will not end ‘in a revolutionary reconstruction of society at large’, but ‘in the common ruin of the contending classes’.
 Karl Marx, Capital, III, Moscow, Foreign Languages Publishing House (FLPH), Moscow, 1959, p. 470; Penguin edition, London, 1981, p. 601.
 Preface by Engels, Capital, III, Moscow, pp. 13-14; Penguin, p. 103.
‘Australian Populism and the Global Financial Crisis – Finding a
place for labour’, Labour and Industry, 20 (3), April 2010, p. 254.
 Capital, III, p. 496; Penguin, p. 628.
 Capital, I, FLPH, Moscow, 1958, p. 464 n.15; Penguin, London, 1976, p. 735 n. 15; ‘While the miser is the capitalist gone mad, the capitalist is the rational miser’, Capital, I, Moscow, p. 151; Penguin, p. 254.
 Suzanne de Brunhoff, Marx on Money, Urizen Books, New York, 1976.
 Cliff Harman, Zombie Capitalism Global Crisis and the Relevance of Marx, Haymarket Books, Chicago, 2009, p. 396.
 James O’Connor, The Meaning of Crisis, A Theoretical Introduction, Basil Blackwell, Oxford, 1987, pp. 69n and 81n.
 Theories of Surplus-Value (TS-V), III, Progress Publishers, Moscow, 1973, p. 456; Peter Love, Labour and the Money Power, MUP, Carlton, 1984.
David Harvey in a paper prepared for the American Sociological
Association Meetings in Atlanta, 16 August 2010, based on his book, The
Enigma of Capital, and the
Crises of Capitalism, OUP, Oxford, 2010, where this point is on
p. 30. In his paper, Harvey twice uses ‘fictitious’ but in ways
that are decorative, not to say redundant: ‘Surplus fictitious
capital created within the banking system was absorbing the
surplus’ before the bank collapses meant that ‘fictitious
leveraged liquidity disappeared’. Is the leveraging or the
liquidity fictitious, or both? Does it matter to Harvey?
 TS-V, II, Progress Publishers, Moscow, 1968, p. 456.
 TS-V, II, p. 482; TSV, I, FLPH, Moscow, n.d., pp.148-295.
 Michael Lebowitz, review of Harvey’s Limits to Capital, Monthly Review, June 1986, pp, 33-41; replies, May 1987, pp. 54-61.
 TS-V, III, p. 508.
 TS-V, III, pp. 508-9.
 Capital, III, Moscow, p. 274; Penguin, p. 387; Capital, II, FLPH, Moscow, 1957, Penguin, London, 1978, chapters 5, 6, 7 and 14.
 TS-V, II, p. 496.
 In like manner, Marx praised the ‘ruthlessness’ of the ‘stoic, objective, scientific’ Ricardo against the ‘base’ moralising of a Parson Malthus who accommodated science to the interest of the landed aristocracy and other ‘gluttonous drones’, TS-V, II, pp. 118-9; TS-V, I, p. 290; TS-V, III, pp. 52 and 472.
 Ron Chernow, The House of Morgan, Atlantic Monthly Press, New York, 1990, pp. 93 and 152.
 Bryan Burrough and John Helvar, Barbarians at the Gate, The Fall of RJR Nabisco, Harper Perennial, New York, 1991.
 Capital, II, Moscow, p. 56; Penguin, p. 137.
 Capital, III, Moscow, pp. 391-2; Penguin, p. 515; TS-V, III, pp. 462, 466, 486 and 494, and throughout volume 15 of Marx-Engels Collected Works, Progress Publishers, Moscow, 1986. The warning against the meaninglessness of M-M’ applies to John McMurty, The Cancer Stage of Capitalism, Pluto, London, 1999.
 Das Kapital, I, Europaische Verlangsanstalt, Frankfurt-am-Main,1966, p. 483; Capital, III, Moscow, p. 465; Penguin, p. 595.
 Capital, III, Moscow, pp. 401 and 409; Penguin, 527 and 537.
 Das Kapital has fiktiv ten times: pp. 483 (thrice), 484, 485, 486 (four times) and 488; illusorisch seven times: pp. 482, 483, 484 (twice), 485, 486 and 492; and Shein, pp. 483 and 485; in Capital, III, Moscow, fictitious appears twelve times, pp. 465 (thrice), 466 (twice), 467 (twice), 469 (four times) and 470; illusory/illusion seven times: pp. 464, 465 (twice), 466, 467, 468 and 474; Penguin has fictitious ten times: pp. 595, 596 (twice), 597, 598, 600 (four times) and 601; and illusory/illusion nine times: pp. 595 (twice), 596, 597 (twice), 598 (twice), 599 and 605; the Charles H Kerr edition (Chicago, 1909) has six illusion/illusory pp. 546, 547, 549 (twice), 551 and 558; and thirteen fictitious, pp. 547 (four times), 548, 549, 550 (2), 552 (four times) and 553. None offers sham or pretence for Shein, which Marx uses throughout Capital to convey appearance or semblance.
 Capital, III, Moscow, pp. 595 and 632-7; Penguin, pp. 730 and 770-5; TS-V, III, p. 472.
 Karl Marx, Contribution to the Critique of Political Economy, Progress Publishers, Moscow, 1970; Capital, I, chapters I – III; de Brunhoff, Marx on Money.
 TS-V, III, p. 131.
 Capital, I, Moscow, pp. 592-3; Penguin, pp. 739-40; and the industrialists’ hoard, Capital, II, Moscow, pp. 492-501; Penguin, pp. 568-77; contrast with misers, TS-V, I, pp. 273-4.
 Capital, I, Moscow, pp. 130-4; Penguin, 227-32; Capital, II, Moscow, pp. 293-98; Penguin, pp. 369-74; Capital, III, chapter IV.
 Michael Heinrich, ‘Engels’ Edition of the Third Volume of Capital and Marx’s Original Manuscript’, Science and Society, 60 (4), Winter 1996-7, pp. 452-66.
 Capital, III, Moscow, pp. 4-6; Penguin, pp. 94-95.
 Marx-Engels Collected Works, 4, Lawrence & Wishart, London, 1975, p. 383.
 Capital, III, Moscow, p. 401; Penguin, p. 526.
 Capital, III, Moscow, p. 466; Penguin, p. 597.
 In the jargon of Wall Street, ‘to capitalise means ‘to take an income stream that you expect to receive from that asset, and divide it by an interest (or capitalisation) rate to arrive at a present value for the item’, Liz Buffa, Word Smart Executive Edition, Random House, New York, 1995, p. 8.
 Capital, II, Moscow, pp. 319-20 (six times), 324 and 503; Penguin, pp. 394-5 (six times), 399 and 579.
 Capital, III, Moscow, p. 407; Penguin, p. 534.
 Capital, III, Moscow, p. 406; Penguin, p. 533.
 Capital, III, Moscow, p. 409n.; Penguin, p. 537.
 Capital, III, Moscow, pp. 465-9; Penguin, pp. 595-9; TS-V, III, pp. 111 and 568n.
 TSV, II, p. 81; TS-V, III, pp. 131, 469 and 475.
 Capital, III, Moscow, p. 467; Penguin, p. 597.
 Capital, III, Moscow, p. 469; Penguin, p. 600.
 Capital, III, Moscow, p. 467; Penguin, p. 597.
Warren Buffett has never owned a ticker-tape to track the
minute-by-minute shifts in share prices. Nor is he interested in how
much money-capital has been sunk into a business, but only in how
much still can be taken from its operation. Roger Lowenstein, Buffett,
Orion, London, 1996, pp. 38-9, 132, 154, 165 and 329.
Capital, III, Moscow, p.
467; Penguin, p. 597.
 Capital, III, Moscow, p. 466; Penguin p. 597.
 Capital, III, Moscow, p. 466; Penguin p. 597.
 Capital, III, Moscow, p. 809; Penguin, pp. 944-5; Marx is discussing land but the point has wider application.
Lowenstein, Buffett, p. 39. His maxim reveals in a dozen words a truth which the
Glossary to the symposium on the crisis in the 2009 issue of Historical
Materialism rendered opaque in as many lines:
Marxist term used most generally in relation to all tradable paper
claims to future wealth. In relation to capital markets, the term
refers to corporate equity, market-capitalisation, and their
attendant social relations. A corporation’s market-capitalisation
corresponds neither quantitatively nor qualitatively to the value of
the corporation’s capital in circulation and production. Rather,
it reflects the aggregate money-value that investors would
presumably be willing to pay in order to secure claims to the
corporation’s future earnings. Its level depends on the range of
factors, including the creditworthiness of the corporation, the
liquidity of its securities, and the general confidence investors
have in the corporation’s future. This money value takes the
appearance of a capital stock because of the general capitalist
tendency to conceive of every regular flow of value (in this case
dividend payments) as a yield on capital. Yet, it is only the price
that investors are willing to pay today for a claim on the value
that will be appropriated by the corporation tomorrow. In this
sense, it is a purely fictitious form of capital.
 Bloomberg Business Week, 1-7 August 2011, p, 60.
 Capital, III, Moscow, p. 467; Penguin, p. 598; Das Kapital, p. 485.
 Capital, III, Moscow, p. 466; Penguin, p. 597.
 Capital, II, Moscow, p. 321; Penguin, p. 396.
 Capital, II, Moscow, pp. 321-2; Penguin, pp. 396-7.
 Capital, III, Moscow, p. 493; Penguin, pp. 624-5.
 Capital, III, Moscow, p. 493; Penguin, pp. 624-5.
 Capital, III, Moscow, p. 493; Penguin, pp. 624-5.
 Capital, III, Moscow, p. 493; Penguin, pp. 624-5.
 Karl Marx and Frederick Engels, Selected Works, Volume Three, Progress Publishers, Moscow, 1970, p. 383.
 Capital, III, Moscow, p. 466, cf. p. 493; Penguin p. 597, cf. p. 625.
 Capital, III, Moscow, p. 493; Penguin, p. 624-5; Das Kapital, p. 510.
 Capital, I, Moscow, p. 162; Penguin, p. 264; Capital, III, Moscow, p. 438; Penguin, p. 569; TS-V, III, p. 454; the Credit Mobilier issued debentures ten times greater than its capital in the mid-1850s, Marx-Engels Collected Works, 15, Progress Publishers, Moscow, 1986, p. 22.
 Capital, I, Moscow, p. 174; Penguin, p. 278.
Capital, II, Moscow, p.
481; Penguin. p. 612; and TS-V,
I, p. 221.
 Capital, III, Moscow, pp. 400-1; Penguin, p. 525.
 Capital, III, Moscow, p. 497; Penguin, p. 629.
 Capital, III, Moscow, p. 497; Penguin, p. 629.
 Australian Financial Review, 23-24 July 2011, p. 61.
 Dick Bryan and Michael Rafferty, A Political Economy of Financial Derivatives, Capital and Class, Palgrave, London, 2006; for a post-implosion update see their ‘Deriving capital’s (and labour’s) future’, Socialist Register 2011, Merlin, London, 2010, pp. 196-223.
 Capital, II, Moscow, p. 148; Penguin, p. 225.
 Capital, II, Moscow, p. 76; Penguin, p. 156.
 Capital, III, Moscow, p. 469; Penguin, p. 600.
 Capital, III, Moscow, p. 469; Penguin, p. 600.
 Capital, III, Moscow, p. 509; Penguin, p. 641.
 Capital, III, Moscow, p. 541; Penguin, p. 675.
 Capital, III, Moscow, p. 474n.; Penguin, p. 601n.; for Marx on 1844 Bank Act see chapter XXXIV.
 Capital, III, Moscow, pp. 470n., 473n. and 908-10; Penguin, pp. 601n., 604n. and 1045-7.
 Capital, III, Moscow, p. 808; Penguin, pp. 944-5.
 Capital, III, Moscow, pp. 614-832; Penguin, pp. 751-971; also chapter XLVIII ‘The Trinity Formula’, and the first 370 pages of TS-V, II.
 Capital, III, Moscow, pp. 809; Penguin, pp. 944-5.
 Capital, III, Moscow, p. 466; Penguin, p. 597.
 Capital, III, Moscow, p. 809; Penguin, pp. 944-5.
Strange to say, Geoffrey de Ste Croix gets this wrong by referring
to the chattel-slave as constant capital, The
Class Struggle in the Ancient Greek World, Cornell University
Press, Ithaca, 1982, pp. 58 and 504-5. Wage-slaves sell a
time-portion of their labour-power, all of which goes into their
products and becomes thus circulating or fluid capital. The
purchaser of a chattel-slave buys the totality of that thinking
tool, to quote Aristotle. Hence, only a minute part of that capacity
enters into each good or service provided by the slave. The
investment in this slave is fixed capital. A third case is where a
chattel-slave is hired out for a set amount of time. The fee goes to
the owner not to the slave as it would with wages under capitalism.
The rented slave now has a double character. To the owner, he is
fixed capital but to the hirer he is now fluid or circulating
because all of the labour-time that has been bought goes into the
produce from those hours.
 Capital, III, Moscow, p. 648; Penguin, p. 787.
 Capital, III, Moscow, p. 624; Penguin, pp. 762.
 Capital, III, Moscow, pp. 775-6; Penguin, p. 911; cf. Moscow, p. 466: Penguin, p. 596.
 S S Prawer, Karl Marx and World Literature, OUP, Oxford, 1978, pp. 133-4, 273-6 and 335.
 Capital, III, Moscow, p. 466; Penguin p. 597; this statement does not contradict Marx’s cryptic definitions of capital as self-expanding value; that process is not ‘automatic’ but depends on labour-power as its source and competition as the spur.
 Capital, III, Moscow, p. 624; Penguin, p. 762.
 Capital, III, Moscow, p. 465; Penguin, p. 596.
 Karl Marx, Pre-Capitalist Economic Formations, International Publishers, New York, 1965, p. 141.
 Capital, III, Moscow, p. 624; Penguin, p. 762.
 Marx, Capital, III, Moscow, p. 25; Penguin, p. 117.
 ‘For Marx, its immediate appearance is but a problem: one must discover and describe the processes that generate this superficial form’, that is, how the appearance is ‘constituted and explained’ by the reality, Kathryn Russell, ‘Science and Ideology’, John Mepham & D-H Ruben (eds), Issues in Marxist Philosophy, volume 3, Harvester, Hassocks, 1979, p. 187.
 Suzanne de Brunhoff, The State, Capital and Economic Policy, Pluto Press, London, 1978.
 Robert E Hall, ‘The Stock Market and Capital Accumulation’, 91 (5), American Economic Review, December 2001, pp. 1197-1200; my The Essence of Capitalism, Sceptre, Sydney, 2001, pp. 59-70 and 338-9.
 Bulletin, 23 May 2000, pp. 64-65, on my website www.alphalink.com.au/loge27~
 Grahame Thompson, ‘Capitalist profit calculation and inflation accounting’, Economy and Society, 7 (4), November 1978, pp. 395-429. Marx endorsed ‘replacement’ cost for inputs, Andrew Kliman, Reclaiming Marx’s ‘Capital’: a refutation of the myth of inconsistency, Lexington Books, Lanham MD, 2007, p. 97.
 Lowenstein, Buffett, p. 241.
Accounting theorists are attracted to the Marxian concept of ‘value’ as more substantial than fluctuating market prices: Critical Perspectives on Accounting includes R A Bryer, ‘Why Marx’s labour theory is Superior to the Marginalist Theory of Value: The Case from Modern Financial Reporting’, 5 (4), December 1994, pp. 313-40; Steve Toms, ‘Asset pricing models, the labour theory of value and their implications of accounting’ 17 (7), November 2006, pp. 947-65; and J S Toms, ‘The labour theory of value, risk and the rate of profit’, 21 (1), January 2010, pp. 96-103.
Neo-Ricardians and analytical Marxists dismiss the very notion of ‘value’ as metaphysical; For rebuttals see Ian Hunt, Analytical and Dialectical Marxism, Avebury, Aldershot, 1993, and Kliman, Reclaiming Marx’s ‘Capital’.
 Sydney Morning Herald (SMH), 20 July 1996, p. 60.
Amit Bhaduri, ‘On the Significance of Recent Controversies on
Capital Theory: A Marxism View’, Economic Journal, 79 (315), September 1969, pp. 532-9; the debate is
in E K Hunt and Jesse G Swartz, A
Critique of Economic Theory, Penguin, Harmondsworth, 1972, Part
3. A brief but technical account of capital theory is in John
Eatwell, Murray Milgate and Peter Newman (eds), The
New Palgrave Dictionary of Economics, The Macmillan Press,
London, 1987, pp. 357-62.
 New Yorker, 25 July 2011, p. 56.
 Marx, Capital, vol. II, Part II.
 Forth Worth trader, Mark Hart, in November 2010,began betting on the implosion of China’s ‘enormous credit bubble’ with three billion square meters of unoccupied floor space while, in the eight largest cities, the ratio of property prices to rent stood at almost twice what it had been in the US when its housing bubble burst. Hart had enriched himself on the sub-prime and EU collapses, SMH, 30 November 2010: BU 8. China is introducing Credit Default Swaps, Asiamoney, June 2011, p. 12.
 New Yorker, 25 July 2011, p. 64.
 O’Connor, 1987, p. 101. ‘Only the expansion of credit money or ‘fictitious capital’ permits the system to solve its realization crisis tendency without at the same time starving productive capital as a result of the unproductive utilization of capital in the sphere of circulation, capitalist consumption, and/or state expenditures’, p. 81.
 J M Keynes, The General Theory of Employment, Interest and Money, Macmillan, London, 1936, chapters 15 and 24; D E Moggridge, Maynard Keynes, An Economist’s Biography, Routledge, London, 1992, chapters 20 and 21.
Keynes was a liberal who admired the foundation text of the economic
rationalists, The Road to Serfdom (1944) by Friedrich von Hayek, Robert Skidelsky,
John Maynard Keynes, 1937-1946,
Macmillan, London, 2000, p. 284; Harry Johnson, ‘The Keynesian
Revolution and the Monetarist Counter-Revolution’, American
Economic Review, 61 (2), May 1971, pp. 1-14.
 O’Connor, p. 73, referring to Harvey’s Limits to Capital, p. 295.
 Capital, III, chapter XIV; Michael Lebowitz, ‘Marx’s falling rate of profit: a dialectical view’, Canadian Journal of Economics, IX (2), May 1976, pp. 232-54.
 Marx, Capital, II, Part III; bourgeois economists acknowledge Marx’s contribution to what they call input-output tables. Paul Samuelson argues that Marx’s ‘finest analytical work came in this area of circular interdependence’, ‘Quesnay’s “Tableau Economique” ’, Ian Bradley an Michael Howard (eds), Classical and Marxian Political Economy, Macmillan, London, 1982, p. 46; Wassily Leontief acknowledged his that input-output tables were in debt to Marx, ‘The Significance of Marxian Economics for Present-Day Economic Theory’, American Economic Review, Supplement, 28 (1), March 1938, pp. 3-4. Harvey downplays the significance of volumes II and III by emphasising that Marx did not complete them, overlooking the claims advanced for their importance by Hilferding and by Marx himself. Harvey’s video lectures and his 2010 Companion are confined to volume I so that those who rely on them need to be reminded that capital operates across a broader canvas, David Harvey, Companion to Marx’s Capital, Verso, London, 2010, pp. 10-11, see missile ‘Who’s afraid of volume II?’, surplusvalue.org.au
 The Essence of Capitalism, Chapters 9 & 14; for early contributions to this question see Dallas W Smythe, ‘Communications: Blindspot of Western Marxism’, Canadian Journal of Political and Social Theory, 1 (3), Fall, 1977, pp. 1-28; and Michael Lebowitz, ‘Capital and the Production of Needs’, Science & Society, 41 (4), Winter 1977-78, pp. 430-47.
 U.S. Census Bureau, Statistical Abstract of the United States, 2001, p. 324; my article in Weekend Australian, 31 July-1 August 2204, pp. 28-29.
Rosa Luxemburg has been one of the few Marxists to ask how military spending could contribute to the expansion of aggregate capital, an insight marginalized because of her under-consumptionist views, The Accumulation of Capital, Routledge paperback, London, 1963, chapter XXXII; despite the emphasis that Michael Kidron gave to the arms economy, he does not even list Luxemburg in his bibliography, Western Capitalism Since the War, Penguin, Harmondsworth, 1970.
 Paul A Baran and Paul M Sweezy, Monopoly Capital, Penguin. Harmondsworth, 1968, chapter 5; ‘monopolising capitals’ is more accurate than ‘monopoly capital’, see my The Essence of Capital, chapter 6.
 I have toyed with the phrase ‘over-consumption’ as a mismatch of the Marxian notion of over-production with Keynesian fondness for under-consumption. The recent wave of over-consumption was an attempt to counter over-production.
Parson Malthus switched from worrying about how population growth pushed up the costs of Poor Law relief for his rural patrons to lauding ‘the passion for expenditure’ among those ‘gluttonous drones’ as a cure for what he saw as under-consumption, Principles of Political Economy, William Pickering, London, 1836, pp. 320, 326, 334 and 408ff.; Keynes, The General Theory, pp. 324-7 and 358-71.
 London Review of Books, 6 February 2003, p. 23.
 For a three-way discussion of the explanation for global turbulence advanced by Robert Brenner in 1998, see New left Review, 54, Nov/Dec 2008.
 For some thoughts on how the commodity market affects the expanded reproduction of capital, see James O’Connor, Accumulation Crisis, Basil Blackwell, Oxford, 1984, pp, 79-96.
 Rudolf Hilferding, Finance Capital, A study of the latest phase of capitalist development, Routledge, London, 1981; working from the German, John Lonie provided a keen introduction, ‘A Note on Finance Capital – Hilferding and Lenin’, Melbourne Journal of Politics, 9, 1977, pp. 93-99.
Two of the many studies that followed Harvey’s novelties are R A
Beauregard, ‘Capital switching and the built environment: United
Sates, 1970-89’, Environment
and Planning A, 26, 1994, pp. 715-32, and R J King, ‘Capital
switching and the role of ground rent: 2 Switching between circuits
and switching between submarkets’, Environment
and Planning A, 21, 1989, pp. 711-38; for one line of Marxist
criticism of Harvey’s subordination of the primary circuit see
Linda Clarke, Building Capitalism, Routledge, London, 1992, pp. 12-13.
Engels corrected the 1849 text for the 1891 edition of Wage
labour and Capital; similarly, Gary Young examines the
difficulties that have flown from a failure to appreciate Marx’s
switch from using ‘exchange-value’ and ‘value’ as synonyms
to treating them as distinct forms, Science
& Society, XL (1), Spring 1976, pp. 72-78.
 Wal Suchting, ‘Marx’s Theses on Feuerbach: Notes Towards a Commentary’, John Mepham and David-Hillel Ruben (eds), Issues in Marxist Philosophy, volume 2, Harvester Press, Hassock, 1979, pp. 5-34.
 Lenin returned to Hegel’s Logic to make sense of why the German Social Democrats had voted for war credits, Georg Lukacs, Lenin, A Study on the Unity of his Thought, NLB, London, 1970, chapter 4; Lenin, Collected Works, Progress Publishes, Moscow, 1972, volume 38.
 Mao Zedong, Four Essays on Philosophy, Foreign Languages Press, Beijing, 1965.
 ‘Tyler Durden’, ZeroHedge.blogspot.com, 6 July 2011.
 ThomsonReuters.com, 11 May 2011; Asiamoney, August 2011, pp. 66-67.
 Beijing Review, 25 August 2011, p. 36.
 Beijing Review, 23 June 2011, p. 37; 28 July 2011, p. 38.
 The Banker, June 2011, p. 47.
 Marx, ‘Preface to the French Edition’, Capital, I, Moscow, p. 21; Penguin, p. 104.
 Frederick Engels, Anti-Duhring, International Publishers, New York, 1939, p. 97; see also Lenin, Collected Works, Progress Publishers, Moscow, 1972, pp. 131-7.
 Frederick Engels, Dialectics of Nature, Progress Publishers, Moscow, 1964, p. 182.
 Marx-Engels, Collected Works, 6, p. 490.
 Engels, Dialectics of Nature, p. 183.
 Dirk J Struik, Birth of the Communist Manifesto, International Publishers, New York, 1971, p. 89. So much for inevitable progress.