File spoon-archives/marxism-thaxis.archive/marxism-thaxis_1997/marxism-thaxis.9711, message 240


Date: Mon, 24 Nov 1997 20:40:47 -0500 (EST)
From: Justin Schwartz <jschwart-AT-freenet.columbus.oh.us>
Subject: Re: M-TH: Fictitious capital and the fetishism of interest



I was talking to my son Joel, four and a half years old. He asked me,
apropos of I am not sure what, since we had been reading about aliens or
some such, "Are there more bosses than workers?" I said, "No, there are a
lot more workers thna bosses. Why do you ask?" He smiled a great big smile.
"Then the workers can beat the bosses!" "Why yes they can," I said. "Now
you tell _them_ that."

On Mon, 24 Nov 1997, Hugh Rodwell wrote:

> As I understand Marx, share capital etc is fictitious because it doesn't
> reflect the substantive value of capital assets, but rather a projected
> return on them.

This is dumb, and if Marx said any such thing, one might excuse it as at
best being the meditations of someone operating in the very early days of
the joint stock corporation. What on earth is the "substantive value" of
the capital assets apart from the projected income stream they bring in?
The book value, that at which they were acquired? But that will represenmt
a guess about their future income stream at that time. Or is it (for
Marx), just the labor they embody? But that won't do, because as Marx
insists, they may become devalued if, for example, they are made obsolete
by new technologies or a collapse of the market for what they produce.

Sure, the quantity of the future income stream is somewhat indeterminate
and depends on various hard to predict contingencies. Which is why a smart
capitalist diversifies her investments. But that does not make the value
of the machine amorttized over its predicted life "fictitious." An
investment if an experiment, but all life is an experiment. 

Maybe what's going on here is that there is an assumption that the only
real "value" of ana sset is its _present_ use value, never mind any future
uses it might have. If people believed that nonsense in a planneds
ocialist society, the plan would be instantly doomed. Obviosuly even in a
nonmarket context one has to take into account future contingencies. X
machine will last longer but take more investment of labor hours now. Y
machine will be cheaprer now but will require sooner replacement. A
planned economy would have to plan based on future factors like that.

 It's multiply fetishistic because it capitalizes guesses as
> to future results as if they were interest (the non-fixed kind), which is
> possibly the most fetishistic of the bourgeoisie's fundamental economic
> categories.

This is also dumb. I don't know why a projection of afuture income stream
is like variable rate interest. In fact, what we have in such a projection
is sort of reverse intrerest, a discount rate. A dollar in a year is worth
80%, roughly, of a dollar now, minus any inflation. So we calculate the
income stream but discount it. 

Why, incidentally, is interest fetishistic? One can see how one might fall
prey to illusion that money itself is productive, but that aside, an
interest rate serves a lot of perfectly sensible functions that would have
to be achieved in any socialist economy. It discounts investment by
reasonable estimates of their risk. (Higher risks mean higher interest
rate.) It rations capital--I mean, capital in the ordinary bourgeois sense
of the term, as investment resources--which is necesasry because capital
is scarce, not free. It serves macroeconomic functions--notoriously, these
days, but these functions, as ways of regulating the economy, are quite
necessary in any economy. For example, it encourages savings or
spending,a s desired. And so forth.

Maybe we should not want new investment to be privately financed and so
vulnerable to the animal spirits of investors (Keynes). I am inclined to
agree, but if investment is planned it will have to be regulated amd that
means the use of a functional equivalent of an interest rate. Thus
Schweickart, whose market socialism socializes new investment and bans
private interest charges, levies an assets tax on productive assets to
raise monies for investment. This is obviously a de facto interest rate.

--Justin






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