As we have already indicated in Capitalization Vol. 2 (Szepanski 2014b), the Greek economist John Milios, with his monetary value theory based on Louis Althusser’s reading of capital, has offered an important approach for a precise conceptual definition of the current capital relationship. (Milios 2009) Milios explicitly opposes both heterodox economics and a Marxism underpinned by Ricardo, citing value (and capital) as the fundamental discovery of Marx as a social relation, insofar as value is (and does not express) the relationship between the concepts of money and commodity. Commodity and money (as form) cannot exist independently of value, and none of the forms of value developed by Marx in Capital Vol. 1 has any precedence over value. Within the form of money, money must then be represented for millions with the formula money-commodity and commodity with the formula commodity-money. Here, Milios refers to the Althusserian type of structural causality, according to which the structure is immanent in its effects and does not exist outside these effects.
The simple value form with which Marx begins the conceptual representation of value forms in Kapital Bd.1 essentially states for Milios that a unit of commodity A has the value of x/y units B. Here, in contrast to most Marxist interpreters of the first chapter of Capital, Milios starts from a single commodity that is differentiated into two components, with commodity A occupying the place of the relative value form and “commodity” B that of the equivalent form. The value of commodity A is to be measured in units of the secondary utility value of “commodity” B (i.e. “commodity” B takes the place of the equivalent, or its secondary utility value is considered to be a measure of the value of commodity A, which is in the relative value form). As soon as a thing occupies the position of the equivalent in the expression of value, the magnitude of its own value can no longer be expressed quantitatively. On the contrary, the thing now functions purely as the quantity of another commodity. The simple value form thus states that x units of commodity A have the exchange value of y units of the equivalent commodity B, or that the exchange value of a unit of commodity A is expressed in x/y units of “commodity” B. The “commodity” B, which is in the equivalent form, is thus potentially already money for Milios. (Cf. Milios 2004)
According to Milios, Marx now has no problem in making several transitions from the simple value form to the extended and general value form and finally to the money form. The general value form is characterised by a single (excluded) equivalent in which all goods express their value (they are now always in the position of the relative value form.) Only a “thing”, whose materiality is, however, completely secondary, can constitute the universal equivalent in terms of its function. In this sense, the first function of money is to be the (external) measure of goods as a general equivalent. The general interchangeability of the goods is here expressed or realised in an indirect, medial sense, i.e. through money, which functions as the general equivalent and through which all goods express their value. Money is regarded by Milios as the representation of value, i.e. money stands for the general value form of the goods and has the potential to be immediately converted into any form of utility value. (ibid.) And thus, even before the commodity enters into exchange, it is at least potentially already a price (but it still has to be sold) and is thus set in relation to money. Marx, like, incidentally, Keynes to a large extent on this question, insists on the endogenous character of money, the importance of which is by no means that it functions as a mere medium of exchange that facilitates transactions on the markets. The first “function” of money is thus defined by Milios with Marx as that of the general equivalent or external measure of values, i.e. the general interchangeability of goods with each other can only be expressed and mediated by money. Milios sees Marx as conceiving a monetary theory of value from the outset. For Milios, the value relation is further on the abstract expression or the embryonic form of the capital relation, in which money functions as a process in itself. (ibid.)
One can now continue, as for example Peter Ruben does, and as is common practice in Marxism, instead of starting with one commodity from two commodities and writing the value form as follows (Ruben 2015: 27):
x commodity A = (x commodity A : y commodity B) X y commodity B
What both Milios and Ruben want to avoid at all costs is to establish the contradictory nature of the equation x commodity A = y commodity B. The equation x commodity A = y commodity B is to be regarded as contradictory in that A and B are qualitatively different commodities. Since the equation, which Ruben does not go into, is in principle reversible, changes in the position of the goods are at least virtually given, although none of the goods can update themselves simultaneously in both positions (relative value form and equivalent form). (The fact that commodity A in the equation is in relative value form and commodity B in equivalent form can be read as a gradual difference). This interpretation of the simple value form also dissolves the contradictory. Here, however, the axiom of symmetry proves to be absolutely necessary for the representation of the equivalence relation of classical goods. (Cf. Szepanski 2014: 138f.)
Ruben would probably consider the explanation of money, as Milios, for example, does, to be inadequate, whereby he attempts to make the function of money as a medium of exchange or tertium comparationis of the comparison of values strong. If vA =vG and vB=vG, then vA=vB (v=value) follows. (Ruben 2015: 30) Ruben finally considers the transitivity of equality to be the decisive property of the form of money (x=y and y = z, i.e. x=z). He also brings Hegel’s concept of existence into play (A-A-A): “If two things or provisions are equal to a third, they are equal to each other” (Hegel 1950: 326) 1
Back to Milios. Although we converge with Milios on many points, both with regard to the conceptual definition of monetary capital and financial risk and the question of derivative markets, which will be shown later, we came to different conclusions regarding the conceptual definition of money already in Capitalisation Vol. 1 (Szepanski 2014a: 154f.). However, there is at least agreement that value theory is only possible as monetary value theory. Let’s go into this briefly.
In order to demonstrate the lack of stability of the economic form constitution, Marx uses a fourth value form in the first edition of capital: “The general equivalent form always applies to only one commodity in contrast to all other commodities; but it applies to every commodity in contrast to all others. If, however, each pair of goods contrasts its own natural form with all other goods as a general equivalent form, then all goods exclude all from the general equivalent form and therefore exclude themselves from the socially valid representation of their values. (MEGA II/5: 43) The argument in the context of a fourth value form, which Marx introduced in the first edition of capital and deleted again in the second edition, shows that, viewed from the perspective of discursively fully developed capital, the representation of the monetary form as a result of its derivation from premonetary value forms must simply fail, because in the fourth value form the commodity that takes the place of the general equivalent excludes all other commodities from the equivalent form. And this applies to every good, so that we are dealing with any number of equivalents. Here we are faced with the problem of Hegelian bad infinity. The fourth value form thus remains conceptually underdefined (it does not solve any economic problem) just as the simple, the developed and the general value form, because here it is possible that within the specific syntax of the commodity chains each commodity in principle occupies the position of the general equivalent, whereby all commodities exclude all from the general equivalent form. (MEGA II/5: 43) The position of the equivalent makes the respective good interchangeable with all other goods and at the same time this position can be occupied by all goods. There is neither a valid numéraire nor a general validity or stability of a social context qua value form. Consequently, the representation of value forms does not reach the general equivalent (value form 3 in Capital Vol. 1) and consequently does not advance to the monetary form (a monetary commodity takes the place of the general equivalent when the monetary form is consistently developed – most Marxist economists still see it this way, apart from exceptions such as Michael Heinrich).
Frank Engster also tries to solve this problem by pointing to the exclusion of a money commodity, which in the strong sense of a gift is given practically-ideally in order to fix an ideal unit of value, which is also decisive for the quantification of the relations of all other goods. Thus not only the apparent break between the general value form and money (form), as stated by Backhaus or Heinrich, but also the break between the general, third value form and the fourth value form would be put right. (Engster 2014: 223) But who decides to exclude money goods? In a certain sense it is the goods themselves who, before they adhere to an ideal unit of value (money), have already decided to exclude the money commodity. But is it really the goods themselves, or is it in fact the owners of the goods, or is it possibly neither the goods nor the owners of the goods? Is it the money, or is it the exclusion itself, which decides on the exclusion, and thus promotes the direct relationship of the goods to each other and their relationship to money? On the one hand, it is money that exposes the goods to their ideal unit of value at one fell swoop and thus places them in quantitative relationships to one another, i.e. confronts them in order to stand up for their identity at the same time. On the other hand, money only reflects the relationship to the goods that the goods have already decided on by excluding a monetary commodity. No real solution will be found here. For the trained Hegelian, the synthesis would probably consist precisely in making exclusion itself a factor of exclusion in order to take the sliding process to the next level in a well Hegelian way. This is probably also what is meant by the figure of catching up.
Money comes etymologically from “to be valid”, and this alludes to the fact that as representation something acquires meaning, no matter what it means. With every valid thing there is also a claim to some kind of influence; what is valid should not only be observed, but also necessarily obeyed. The claim can be based on a theory as well as on an objectivity such as money, the latter asserting its claims “as if by itself”. The logical validity of a proposition results in turn from the impossibility of simultaneously affirming and negating it. Here, validity belongs to the form of theoretical practice.
Money does not simply passively claim the function of measure (of commodity values), but it uses the weak or under-determined power of a validity (weak, inasmuch as it is in the last instance the capital that causes the power of money), which distinguishes its function, as if it had ever already attained the function of validity. It can do so because its first two functions, being measure (it measures the productivity of capital and labour) and means of circulation, are themselves results of money as capital. Money, in its function of measure, already functions as a reliable social fact in a socio-economic context of arbitrary, infinite monetary transactions within capital as a total complex.2 In this respect, the idea of catching up could well be affirmed. Money, which is now to be understood from the outset as a result of capital, distinguishes itself at once as symbolic money (the name alone is enough to make it effective) and in return draws on material from the collections of goods to embody it (necessary divisibility of the material). As such, the money then in fact realises a kind of objectified, social relationship.
The commodity is what costs something, and money is what it costs. So one formulates correctly when one says that X euros are to be paid per commodity x or derivative y. This is a symbolic expression of a relationship. Capitalist money reaches its validity as a symbolic marker representing (unstable) purchasing power – and all of a sudden, in so far as money as a social fact is already recognised “socially”. And this means that money is associated with the certainty that you will get something in return. Symbolic money, as something that is in principle non-contentual (it is non-material, it is therefore more of an absurdity than a thing, it exists only by way of representation), refers to the most diverse goods that are opposed to money as all content; and thus goods are not money and money is not a commodity. (Cf. Bockelmann 2004: 180f.) The fact that money has no content also points to the fact that money is not to be understood as the embodiment of general wealth (as a money thing or money commodity), but rather remains in all its materializations a disembodied body, i.e. the object (in itself) or an abstract form. Thus coins, notes, numbers and bits and bytes can represent money, and this means that no gram of value is stored in money. Furthermore, by representing capital and its movements, money itself has a weak active force, which at least potentially values all kinds of objects. And the suddenness of the whacking of symbolic money, which is also measuring money, means that it puts (and is put by) all goods into immediate exchangeability. Money, as a social mediator, has no content, while all content is set against it as a quantity of goods. All content in turn means that the goods are elements of a quotient set whose property is characterised by equivalence (symmetry, reflexivity, transitivity). As part of this set of quotients, the goods must update their equivalence as values describing their equivalence ratio (which is not opposed to the polarity ratio of the goods), while the value continues to have a purely virtual status. (Goods must be sold or updated, otherwise they merely have the status of a potential commodity.)Despite the separation in principle, money and commodity remain qua equivalence, insofar as the commodity is defined by its reference to money and the latter by its reference to the commodity, but at the same time commodity and money are the negation of each other, i.e. money is non- commodity by its reference to the commodity and commodity is non-money like the commodity is non-money in its reference to money. (ibid.)
By virtue of its objective validity, money is potentially “to have everything” (as all obligations can be settled), and this corresponds, on the one hand, to its validity as capitalist money and, on the other hand, to its peculiar positioning or relation to the commodities. Validity implies convertibility or potential purchasing power, i.e. exchangeability for goods, which, however, is not a substantial characteristic of money, but arises from its specific relation to goods, which in turn bring money itself to bear as a price (in the medium of money). This purely relational aspect between money and goods is not quantifiable. It is a function of representation, whereby validity is not effective in itself but always for something else, i.e. the validity of money explicates the structure of the representation of an absent person, insofar as the absent person concerns capital and value. (Strauß 2013: 129f.) Money is initially regarded as the representation of value, which is absent but remains absolutely necessary for capital, especially in its absence. As a part of economic reality, capitalist money realises validity quite explicitly.
As we have already seen, the validity of money in terms of purchasing power marks a separation of money from all goods, whereby money is at the same time subject to a development that aims at reproduction in primary potency, which in turn money cannot achieve within its equivalence relation to goods. This appropriation is not given by exchange, but presupposes the capital relationship. The theoretical position of conceiving of money purely as a medium of exchange or as an asset that has arisen from the exchange of goods does not take into account that not every offer to sell must lead to a purchase, and thus in complex economic relationships completely different forms and functions of money must necessarily come into play.3 Of course, exchange, in so far as it co-regulates the reproduction of a complex economy based on the division of labour, represents one of the conditions for modern capitalist money. This requires a numéraire that has an explicit algebraic structure. (Ibid: 336) When Marx speaks of money as a “social relationship”, this means that money must already possess a certain stability, a wide range and power of dispersion, i.e. it must be generally accepted and acknowledged, or, to put it in modern terms, it must have an inherent network quality that guarantees the reproduction of a highly complex capital economy. (Keynes conceives of money as a numeréraire or unit of account, which here is already rudimentary for the measure of value and credit, as the most important of all monetary functions). In order to be regarded as capitalist money, which is much “more” than just numéraire alone, i.e. to which the more is already inscribed and which is thus ever already related to deep money and capital markets, there must be a highly developed payment and credit system within the framework of capital as an overall complex, so that financial transactions can be processed efficiently and as frictionless as possible and, in particular, the instructions for future payments (capitalisation) can be realised. In addition, substitutes must be available for its value retention function. Although capitalist money does not have to have a 100% stable value standard for its function as a measure of value, for example as a monetary commodity (ideal value unit), the value standard must not be too volatile either, otherwise its asset protection quality or its function with regard to credit will become problematic (inflation/deflation). Even the modalities of money issue are not fully regulated. Nevertheless, a capital system based on credit-financed capital investments, notional and speculative capital needs a stable measure, or as it is called, a stable valuation standard. The term “standard” here refers more to the aspect of a socially accepted and universally valid money than to its power of quantification. This stable standard of valuation (function of arithmetic money) refers to the general transmission capacity of money, but does not even bring a number of other monetary functions to light – means of payment, credit, withdrawal of the money supply from accumulation, money as capital etc. (Cf. Bahr 1983: 406) Without sufficient operationality of these monetary functions, the capital economy cannot be kept sufficiently flexible, while money and its functions are presupposed to have a fully developed capital economy. Today, money is based on constellations consisting of state and private functions and controls that are both regulated and contingent. Private banks are regulated to a certain extent by state authorities and central banks (by the monetary policy of the central banks), but the money-creating issuance of means of payment by private banks qua lending or the existence of derivative markets alone indicate that the control competences of states and central banks are limited in that they cannot regulate the global dynamics of money capital accumulation in toto, but can only accompany it to a certain extent.
Money intrinsically has no value, it cannot store value. The “value” of money, in contrast to the value of goods, consists rather in the presence and realisation of the relationship G-G
(capital). Money as capital contains the instruction for future multiplication, whereby it should be noted that the future cannot be determined sui generis, for as such it would already be past. Money as capital is set in a quasi tautological relationship to itself, in which only the quantitative difference of G-G, i.e. the reproduction, is the crux. The only sense of this relation, which leads from money to money, can therefore only consist in quantitative multiplication, or, to put it another way, this relation is a unilateration capable of quantitative addition. The surplus is injected as quantity into the tautological chain. Money as capital must be sufficient to determine the quantitative surplus, which, however, always remains scarce. To put it another way: capital is a law that defines that the meaning of the relation G-G
must satisfy the surplus, a surplus that is per se lacking. (Schwengel 1973: 294f.) The respective presupposed money (signifier) is treated like a signifier (More), which shows itself in surplus-containing signifiers (money' ). Marx now considers a further conceptual shift to be necessary in order to explicate this sliding figure, i.e. the conceptual difference between labour and labour force becomes the source of possible surplus production, the determinant differentiator of which, however, continues to be capital, which differentiates a sui generis unfinished movement. The signifier surplus value, which is contained in the chain of signifiers of the surplus value of money and at the same time remains invisible, is shown in ever more representative signifiers, which represent nothing more than the signifier of the more (as monetary capital). Monetary added value implies, on the one hand, differential repetition as quantitative variation and, on the other hand, self-referential setting (determination), which, however, does not lead to a fixed result and can only have a defining effect by permanently pushing forward the increase. (Ibid.) As such, it is compatible with quantified repetition. Added value now becomes an (absent) instance, which at once decides on the instruction for future reproduction. Capital must constantly hope for a gain in time, but this can never be obtained. This is expressed in monetary capital as difference, in so far as it is dependent on the project of calculating the future, which as the not-yet-appropriation is always pending, and this means at the same time the more that must be continuously multiplied. The processes of the multiplication of monetary capital imply the release of social practices in which quantitative difference, setting (determination and superposition) and repetition (idempotence and virtualization-updating) are mutually dependent, whereby setting means the destruction of every fixed result qua potentially circulating structure (virtualization), which in turn implies repetition qua potentially fixable circulation (actualization). These virtualization-updating circuits remain per se tied to the goal of achieving more. (Ibid.: 294) A strange kind of un-equation that takes place here beyond a mere bourgeois distribution of the more. Contrary to the equivalence of exchange, the abstract More is to be understood as that decisive instance of capital, as that shifted signifier that appears in the representing signifiers of money. The concept of "added value of money" here conditions the concept of added value sui generis, in so far as it has completely emancipated itself from content, and this state of affairs implies as a purely formal sliding process the systemic "lack", the "lack" of more or the famous immoderateness of capital, whereby this, as anticipation of the more, dominates the lack and not vice versa, so that any lacanistic position of lack is excluded here. (ibid.: 191) Contrary to the exclusive foundation of surplus value in living labour, we also assume the possibility of a machinic, an algorithmic and, in general, a surplus value that arises through the exploitation of differences. Conceptually, we can assume a virtual simultaneity of commodity, money and capital, and this with the simultaneous determination of simultaneity by capital in the last instance. Within the quasi-tautological formula G-W-G, money is not spent, but rather advanced and laid out into production, in order to return from it increasingly to itself. Here money functions as capital, within whose self-referential relation G-G’ it circulates. If money as capital has the capacity to set itself as an end in itself, then it comprehensively controls the sphere of production in order to integrate it into the primary monetary circulation G-W-G’. (Cf. Sotiropoulos//Milios/Lapatsioras 2013a: 43) The production and circulation of goods must therefore be understood as integrations (both structural and temporary) in the monetary economy of capital, i.e. as phases, aspects and parts of the circulation of monetary capital. We can think of this with Laruelle as the irreversible logic of uni-lateral duality or as the mono-lateral nature of determination-in-the-last instance. (This means that the meaning of the term “relation” must definitely be transformed, namely into that of a uni-lateral relation or even non-relation). Marx has shown that at the level of individual capital the formula G-W-G’ is the decisive expression of all economic relations appropriate to capital, and this naturally includes the production of goods, which has now become a purely functional process, a process for exchange or for profit. Capital already binds the production process to the (monetary) circulation, i.e. production is a phase or moment of circulation of capital, the general form of which can be described by the following formula: G-W-P-W’-G’ (ibid.)
In this way, the logic of capitalisation applies a priori to each individual capital, whatever fraction or sector it belongs to. Thus, first of all, each capitalist enterprise must be considered equivalent to every other one, and this equivalence refers to the enterprise as a structural-functional “place” of capital, where and from which the main activities of monetary capital are generated. The above formula of the circulation of monetary capital (in relation to the circulation formulas of commodity capital and productive capital presented in the second volume of Capital) is the primary expression of the capital economy and its social relations, which include the production of goods as production-forexchange and production-for-profit. This also means that money is only one manifestation, but the primary manifestation of capital. Every capitalist enterprise, no matter what economic sector it belongs to (primary, secondary or tertiary sector, circulation, finance), has to pursue structurally equivalent capital processes a priori, starting with the use of monetary capital and the purchase of goods that generate costs (purchase of means of production, raw materials and hiring of labour), in order to then produce goods in the course of production processes that belong to a different quantification than the purchased goods, i.e. realise a higher price as monetary output than the monetary input. 4
Each capitalist acts structurally as a kind of trader who, with borrowed money or as a money owner, buys goods (input of the enterprise) to sell a produced output and/or as a manager who balances, monitors and coordinates production processes to make them more efficient. And prices are set in an enterprise not only to produce a monetary output that is higher than the monetary input of a given period, but to realise at least an average rate of profit in the markets. And this is also true for companies in the financial sector. The financial enterprise generates costs, hires workers and buys machines to create and sell certain goods: Exchange values, which are utility values for others. (ibid.: 45) The financial enterprise may include different types of institutions, but it produces certain services that are capitalist goods or capital. Financial capital is also subject to the relation between virtually circulating capital structure and virtually fixable capital circulation. It is thus a matter of cycles initiated by money and always only provisionally completed, or, more precisely, of repeated extended spiral movements or processes of extended reproduction (including production and circulation) homogenised by money, which have their quasi-transcendental condition at the level of total capital.
If one extracts the most important phase from the permanent capital metamorphoses of money, goods and productive capital, namely the movement of money capital itself, then at least two capital subjects are present in it. The place of capital is occupied by the money capitalist and the functioning capitalist, so that in the analysis of capital one cannot abstract from the circulation of interest-bearing capital from the outset. For this purpose, the Marxist economists Sotiropoulos/Milios/Lapatsioras have developed the following diagram (ibid.: 8):
The money capitalist (A) is the addressee and owner of securities (shares, securities, derivatives etc.), which contain a written promise of payments by the functioning capitalist (B), which is still contingent despite the provision of securities. This promise certifies that the money capitalist (A) remains the owner of the money capital (G), so that in a monetary transaction the acting capitalist (B) is only transferred the right to use the money capital (G) of the money capitalist (A) under specific conditions (interest and repayment) for a certain period. If the company is listed on the stock exchange, then the managers of the company correspond to the acting capitalist (B) and the money capitalist (A) corresponds to the legal owners. The functioning capitalist (B) uses the money (G) as capital to make the necessary purchases and to organise and control the production process with the aim of generating profit. (Ibid.: 8f.) This now leads to the following consequences: 1) The two places inherent in the capital relation are occupied by financial and functioning capitalists, thus rejecting the distinction made by Keynes between a productive class located within the enterprises and an external and, in relation to production, parasitic class of reindeers. 2) Financial security is a form of ownership of capital. First- and second-order ownership securities are paper duplicates which have a price for the owners in terms of income to be realised in the future (capitalisation according to an interest rate representing the respective risks). Ownership titles are forms of notional/speculative monetary capital. The price of an ownership title is the result of the capitalisation of a monetary income. The financial mathematical operation consists in calculating (discounting) the present value (of an economic unit) of expected future profits. (Bichler/Nitzan 2009: 188f.) 3) The financial mode of capitalist property as a promise and demand for the appropriation of a future surplus opens up a terrain in which any arbitrary income stream can be put in relation to fictitious/speculative capital. 4) There is an increase in non-bank loans. Risk management, which can be diversified into solvency, interest rate, liquidity and credit risks, is now at the heart of the financial markets and their decision-making problems. Contingency, as a possibility of not realising an expected profit, must always be included in the planning of a company.
The monetary techniques of risk management can be explained using the example of capital pricing processes. The authors Sotiropoulos/Milios/Lapatsioras have written the following formula: Based on a constant interest rate (r) and a future stream of profits (Gt + 1,Gt + 2 … Gt +) a current value of Kt can be capitalised as follows (Sotiropoulos//Milios/Lapatsioras 2013a:140):
Since every future profit is to be classified as contingent, there is no way to exactly predict the profits as quantities. However, at least the degree of confidence expressed in the interest rate r can be expressed in quantitative terms.
The idea of the capitalist as a functionless and absent owner who makes his profit outside the production process in the form of a pension by taking advantage of the scarcity of capital goes back to Ricardo’s works. The autonomy from the production process gives the reindeer free access to the financial markets, where he benefits as a participant precisely when he generates a pension or profit by taking possession of part of the income created in the “real” sphere of production. In this sense, the modern reindeer functions as an irresponsible usurer who hinders the production and accumulation of utility values by seeking and realising profit exclusively in the circulation sphere (through speculation and appropriation). Thus the formula G-G′ is at least partially read in Marxist literature: The profitability of capital can therefore be ensured by two different modes: A productive (G-W- G′) and a parasitic or speculative mode (G- G′′, with G′′ = ΔG′). Ricardo himself, of course, does not come to such conclusions, but nevertheless he has significantly influenced most of the Marxist literature with his theory of pensions and labour value. When the reindeer finally becomes dominant in the economy, the productive capacities of “society” are suppressed or sabotaged, as Bichler/Nitzan say (Bichler/Nitzan 2009), while the speculative and predatory activities of financiers come to the fore. The main motive of capital would then in fact be the restless search for profits in the financial circulation, which in the end, however, would still come from the production processes of industrial capital or from the incomes of wage earners. Circulation would be the decisive means of absorbing profits that were previously generated in production or will have to be generated in the future to cover debts. It is precisely this state of affairs that would today favour the stagnation and instability of the production of utility values. This is a position diametrically opposed to Marx’s theory of value and capital, as we will show later.
At the end of our analytical short run through the monetary theory of value, let us come to fictitious capital. In the case of interest-bearing capital, the value of regular cash payments (interest) is determined by capitalisation at the respective average interest rate. Marx’s concept of fictitious capital (government bonds, securities, derivatives etc.) cannot be understood without reference to interest-bearing capital, because here already a fictitious doubling of capital into functioning capital on the one hand and a title of ownership on the other hand takes place. Interest-bearing capital is sui generis fictitious capital, whose price is determined on the basis of income and returns expected in the future. The true appearance of capital is necessarily its fictitious form. Capital is fictitious not because of its volatility in the financial sphere or because of its imaginary separation from “real capital”, but rather, at least according to John Milios, the term “fictitious” means that the relations of capitalist production are reified – the relations of capital appear as a thing, as a commodity sui generis, as a financial security. (Milios 2004) However, the term “reification” must be put in inverted commas, because fictitious capital already includes a temporal and a relational pricing process related to the capitalisation of future income. Fictitious capital represents a specific form of real financial capital. Here, a “doubling of reality” takes place, so to speak, although “real reality” can only be distinguished analytically from fictitious reality, while the link between the two realities can never be broken. On the capital market, the fictitious doubling of capital (functioning capital and ownership title) is given a real-economic existence. The ever already probability-oriented fictitious capital has a fictitious character to the extent that future payments are uncertain, but they are usually made anyway (whereby collateral must be deposited for loans) and thus have an effect on the “real reality” of the economy, so that they themselves are “real” again. Even in the case of a loan, the fictitious capital itself can double if the borrower, in the function of a capitalist, uses the borrowed sum of money profitably and the lender can expect repayment and interest in the future. If the monetary claims included in the fictitious capital take the form of goods or capital (shares, bonds, securities, etc.), the loan can be paid back in cash. If the monetary claims included in the fictitious capital take on the form of goods or capital (shares, bonds, etc.) and become arbitrarily transferable, then the mirror image of the initial capital participates in the circulation of capital just as much as the original sum of money: the purchase of a property title enables the specific use of the secondary utility value of the monetary capital, which consists in its trading and yield, while the seller of the bond is by no means excluded from the capitalisation of the monetary capital, because just as with the sale of ordinary goods, the issuers of the bonds have the money that the sale of the property title brings them in real terms, in order to finally set in motion profitable processes. (Cf. Lohoff/Trenkle 2012: 131f.).
Moreover, fictitious capital is also to be regarded as capital from the perspective of total capital or the overall economic process. Productivity gains through the use of new technologies raise expectations of higher profits in the future and lead to an increase in shares and assets, while at the same time cost reductions achieved through increased productivity dampen inflation. If low-interest credit conditions initiated by central banks in the face of subdued price trends are now added to this, this can in turn increase the demand for fictitious capital, which in turn stimulates the growth of production and productivity, as far as the development of profit rates allows.
Moreover, fictitious capital also incorporates the representation of capitalist reality – ideas, perceptions, knowledge and discourses that do not result from the opinions and ordinary conceptions of the actors, but rather from the social and economic relations of capital itself. The ideological representation that John Milios always links to Marx’s fetishism theory is not a subjective phenomenon based on illusions, beliefs and opinions, but rather refers to an economic reality mediated by economic objects and their relations. (Cf. Sotiropoulos/Milios/Lapatsioras 2013 a: 148f.) In this respect, these are objective perceptions which keep the economy and class structure essentially opaque and at the same time call for a mode of behaviour and actions adequate to capital, which are absolutely necessary for the effectiveness of capitalist power relations. In this context, the financial markets today play an active role in the organisation of social power relations. Capitalisation therefore always implies strategies of valuation, which are the result of certain “representations” of the economy based on risk. Thus, the interpretation of corporate fundamentals is inconceivable without this kind of “ideological” representation. The multiple economic-technical-political events that emerge from the companies themselves are converted on the money and capital markets into objective perceptions and quantitative signs (a-significant semiotics). Furthermore, the financial system today also usurps the representation and quantification of social power relations and thus the everyday life of people. There is no need at all to link these issues to the debates on models that focus almost exclusively on the effectiveness of information, on whether or not market participants are able to correctly capture an essential part of the observed reality (fundamental data). Proponents and opponents of these models share the thesis that it is always a matter of relations between the observing subjects (market participants) and the observed objects (reality). The subject is understood as external to reality and reality appears as completely transparent. In the end, the dispute is solely about whether the market participants have the ability to use useful information and how this influences their decisions. The position of Marx breaks radically with this anthropological and at the same time empirical perspective. For Marx, the observing subject has always been involved in and dominated by the suprapersonal economic relations of capital, by the objective forms of the existing complexes of capitalist power relations, and this quite independently of the quality and usefulness of the available information. (Ibid.) In the Grundrisse, Marx writes: “Society does not consist of individuals, but expresses the sum of relations, relationships, in which these individuals stand in relation to each other. (MEGA II/1.1: 188) Society, i.e. the economy, is not constituted by individuals, but expresses, according to Marx, the sum of the relations in which individuals exist. The relations are not presented here as transcendent, but as immanent in terms.
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