Forum Post: Fictitious Capital

Oscar Wilde said, “a cynic is one who knows the price of everything and the value of nothing.” I think that describes a fool much better. A cynic originally meant one who demands honesty no matter how painful. The painful truth about the stock market is that after an IPO that capitalizes production of material goods and services, all trading has no value at all to the real economy, though the stocks traded do have prices. Look up "Fictitious Capital."

See Marx on fictitious capital. en.wikipedia.org Fictitious capital Fictitious capital (German: fiktives Kapital) is a concept used by Karl Marx in his critique of political economy. It is introduced in chapter 25 of the third volume of Capital. Fictitious capital contrasts with what Marx calls "real capital", which is capital actually invested in physical means of production and workers, and "money capital", which is actual funds being held. The market value of fictitious capital assets (such as stocks and securities) varies according to the expected return or yield of those assets in the future, which Marx felt was only indirectly related to the growth of real production. Effectively, fictitious capital represents "accumulated claims, legal titles, to future production"[2] and more specifically claims to the income generated by that production. • Fictitious capital could be defined as a capitalisation on property ownership. Such ownership is real and legally enforced, as are the profits made from it, but the capital involved is fictitious; it is "money that is thrown into circulation as capital without any material basis in commodities or productive activity".[3] • Fictitious capital could also be defined as "tradeable paper claims to wealth", although tangible assets may themselves under certain conditions also be vastly inflated in price.[4] In terms of mainstream financial economics, fictitious capital is the net present value of expected future cash flows.[5][6]