Material World: Has capitalism become financialised? (2025)

The Material World column from the May 2025 issue of the Socialist Standard

The financial crisis of 2007-2008 triggered by the large-scale collapse of mortgage-backed securities in the United States was an important catalyst in promoting the view that capitalism has become ‘financialised’. Financial speculation has come to be seen not only as something increasingly autonomous with respect to the real economy (based on the production of commodities), but also as increasingly dominant in determining what happens in the latter.

The crisis was looked upon as being essentially a product of the short-sighted and irresponsible shenanigans of the financial community, aided by the New Financial Architecture (NFA) instituted in previous years and the radical financial deregulation this all entailed. In short, it was said to be the outcome of a steadily intensifying process of ‘financialisation’.

Fictitious capital

Financial speculation grew out of the traditional credit system centred on banking and became more prominent with the rise of the joint stock company. Financial securities initially took the form of stocks and bonds but in the last few decades have proliferated into a bewildering array of financial products. They are all examples of what Marx called ‘fictitious capital’, a future income stream converted into a notional lump sum. A share certificate, for instance, exists largely as a paper claim on future profits to be paid out in the form of dividends.

There is a difference between fictitious capital and an interest-bearing loan provided by a bank to an industrial capitalist to purchase means of production. In the latter case this money capital is incorporated or utilised within the process of the expanded reproduction of capital. The bank takes a cut in the form of interest payments from the increased value – or surplus value – generated at the point of production.

This is not the case with fictitious capital for the simple reason that this does not actually function as capital. That indeed is the reason why it is called fictitious capital. It is not implicated in the expanded reproduction of capital.

Because the stock market comprises a separate market for the circulation of fictitious capital this encourages the illusion that such capital is somehow independent of the real economy – or even that it constitutes ‘real capital besides the capital or claim to which they may give title’ (Marx, Capital, Vol. 3, ch.29. Penguin translation). Obviously, if fictitious capital was qualitatively identical to real capital and able to interact with the latter on equal terms, so to speak, it would then be able to generate real wealth – real profits – all by itself and would cease to be dependent on the real economy for any income it lays claim to.

But, of course, this cannot be the case for the reason so succinctly spelt out by Marx, namely that a capital cannot exist twice ‘once as the capital value of titles of ownership, the shares, and then again as the capital actually invested or to be invested in the enterprises in question’. The problem is that this is precisely what much recent commentary on the subject of crises would seem to imply.

If these ‘financialisation theorists’ are correct in what they say then this would suggest, as Stavros Mavroudeas has pointed out, that ‘financial profits are not a subdivision of surplus-value’ (and) ‘the theory of surplus-value is, at least, marginalised’ (and that) ‘consequently, profitability (…) loses its centrality and interest is autonomised from it’ (quoted in tinyurl.com/2rafv87w ).

Needless to say, if true this would have certain practical implications.

Are we debt peons?

It would seem to suggest, for instance, that more importance ought to be attached to the problem of so-called ‘secondary exploitation’ rather than the primary exploitation that occurs in the workplace (and manifests itself in the production of surplus value). In other words, according to this way of thinking, workers are to be looked upon more as debt peons than wage slaves and, consequently, more attention should be paid to measures such as keeping interest rates down, rent controls, improved trading standards and so on as a way of alleviating their situation.

It is quite true that many workers do indeed qualify as ‘debt peons’, burdened with a variety of debts such as student loans, personal loans, and mortgages. However, their status as debt peons is essentially a derivative one stemming from the economic precariousness they experience as wage workers. It is because of this that they fall into debt. They don’t become wage slaves in order to pay off their debts as debt peons. If anything, it is often the other way round.

In any event, the basic premise of the financialisation theorists is questionable. The illusion that financial gains can somehow become autonomous with respect to the real economy can only be sustained if you focus on the micro-level – the individual investor of fictitious capital.

If an investor sold their shares on the stock market then, of course, they might very well realise a capital gain and be able to purchase tangible goods – real wealth – with the money they received. Their fictitious capital would not have been implicated in the production of real wealth and yet would have resulted in an augmentation of the investor’s own real wealth.

However, if every other shareholder followed suit and simultaneously sought to dispose of their shares as well then the price of these shares would plummet to zero thereby demonstrating their essentially fictitious character. Of course, this hypothetical scenario is inherently absurd – after all, to sell your shares you need someone to buy them – but it does bring out the point that fictitious capital is not about value creation at all. It’s at least partly about speculation and this was spectacularly demonstrated in the case of the 2007-8 financial crisis when the fictitious value of certain financial securities simply evaporated.

Robin Cox

Cooking the Books: Blowing bubbles (2025)

The Cooking The Books column from the April 2025 issue of the Socialist Standard

In a Communist Party of Britain supplement in the Morning Star (18/19 January) one of its leaders, Alex Gordon, ex-president of the RMT, set out its theory of economic crises:

‘Beyond profits extracted from surplus value, capitalists amass capital via bank credit and stock markets. Fractional reserve banking creates new credit many times the original deposits. Stock markets likewise multiply the value of the original means of production. Marx called this fictitious capital, since it separates from and achieves value far beyond the original productive capital. Fictitious capital feeds the economy and finances debt out of all proportion to the means of production it is based on. When this bubble bursts this is a crisis’.

The first sentence is correct. Capitalist firms acquire additional money-capital to invest in production for profit by borrowing from banks and/or selling new shares on the stock market.

The second sentence is incorrect. Banks can’t lend more than they have as their own capital, deposits and what they themselves borrow, so they cannot — and so do not —artificially inflate credit in the way Gordon suggests. It’s a bit surprising that the Communist Party should have fallen for that old currency crank myth.

The third and fourth sentences are incorrect. Stock markets do not ‘multiply the value of the original means of production’.

The fifth sentence is incorrect. ‘Fictitious capital’ does not ‘feed the economy’ in the sense of providing more money-capital that can be invested in production. If anything, it feeds off the economy.

By ‘fictitious capital’ Marx simply meant what actuaries call ‘capitalisation’, or the conversion of an income stream into a notional capital sum which, if loaned, would yield over a given period of time interest of the same amount.

Shares are a form of fictitious capital calculated from the expected future stream of income coming from the profits made by a capitalist firm and entitle their owners to a share in these profits. They are subsequently traded in their own right independently of the capital originally invested in production, whether to share in the profits or to sell later at a higher price. But, as Marx noted:

‘The independent movement of these ownership titles’ values, not only those of government bonds, but also of shares, strengthens the illusion that they constitute real capital besides the capital or claim to which they may give title …. In so far as the rise or fall in value of these securities is independent of the movement of the real capital that they represent, the wealth of the nation is just as great afterwards as before’ (Capital, vol. 3, ch. 29, Penguin, pp. 598-9).

A recent example is ‘China’s cheap AI chatbox wipes billions off Silicon Valley shares’ (Times, 28 January) where a part of the fictitious capital was wiped out without affecting value of the real capital invested in the corporations’ tangible assets. Conversely, contrary to Gordon’s claim, an increase in share prices is not an increase in real capital (though it may reflect this).

Gordon is offering an essentially financial theory of crises, based on a boom in stock exchange prices (and on banks supposedly creating credit by a stroke of the pen) generating additional money-capital that is invested in expanding productive capacity; eventually too much in relation to paying demand is produced and the bubble bursts.

The stock exchange crash is indeed a consequence of such overproduction. It’s when stock market traders realise that the fictitious capital represented by shares is over-priced due to the future income stream of profits on which it is based becoming less than anticipated. But the question is: what causes the overproduction? Marx looked for the explanation in the ‘movement of real capital’ not in what happens in the world of finance.

Your home as ‘fictitious’ capital (2024)

From the April 2024 issue of the Socialist Standard

In more recent times the opportunities to ‘make money from money’, so to speak, have expanded for the ordinary person. For example, the 1980 Housing Act introduced by the Thatcher government in the UK gave council house tenants the legal right to buy their council homes at a discounted price. This, combined with the introduction of mortgage interest relief, significantly impacted on the property market and widened popular participation in it. Around the time of the First World War three-quarters of the UK population rented their homes; by the early 2000s the situation had reversed with over 70 percent of the population nominally owning their homes – although the percentage has since declined due to the increasing difficulty of would-be first time buyers to get on the housing ladder.

While rising house prices might put the idea of owning a home beyond the reach of some would-be first time buyers it is, paradoxically precisely these rising house prices that make the idea of buying a house such a financially attractive proposition. While house prices as a multiple of average earnings fell during the late nineteenth century (with the result that buying was not seen as a worthwhile investment, which explains why rented accommodation was such a widespread phenomenon in early twentieth-century Britain), that trend has reversed in the late twentieth and early twenty-first centuries, boosted by the relative stagnation in wages. The benefit of owning a home, steadily appreciating in value, instead of paying ‘dead money’ for some over-priced rental property, is all too obvious.

A few people with the financial resources to engage in the ‘buy to let’ business might find themselves in the position where they can comfortably live off the rents of their tenants. However, for the vast majority who have purchased a home, renting it out is simply not an option. Even taking in lodgers would be impractical in many cases.

Consequently, most homeowners continue to depend absolutely on some form of paid work since, with home ownership, come financial commitments such as mortgage repayments. True, you might manage to sell your home and realise a capital gain (particularly if the property market is booming) but you still have to find somewhere else to live. It is this that makes the idea of treating one´s home as (fictitious) ‘capital’ – as some commentators do – somewhat problematic. You cannot be without a home since it is a basic human need (unlike other forms of fictitious capital).

If you do sell your house at a time when house prices are rising then you have the problem of having to pay more for some other house. On the other hand, as well as going up, prices can also come down as occasionally happens after a property boom. Having to sell your property in a slump could very well plunge you into dire financial difficulties that you may never recover from, financially speaking.

The above qualifications notwithstanding, it is nevertheless the case that a fairly large percentage of the working class do indeed engage in the speculative buying and selling of property at some point in their lives. Normally, the primary means of purchasing a property is via a loan (mortgage) from a bank. Bank loans (in this case for consumption as opposed to the production of commodities) are, as we saw, a classic example of fictitious capital.

In the past, at least in the UK, it was building societies (or ‘mutuals’ controlled by their members) that had a virtual monopoly in the issuance of mortgages. This changed in a big way in the 1980s with banks entering the mortgage market and offering a variety of different mortgages to suit different customers. Mortgage loans as a percentage of total bank loans have subsequently grown very significantly.

These are ‘secured’ loans inasmuch as your home serves as collateral, meaning that if you fail to keep up with your mortgage repayments the bank can take possession of your home. The same is true of car loans. However, there are also various kinds of unsecured loans where collateral is not required, such as personal loans, student loans and credit cards. These are riskier from the standpoint of the lender and for that reason sometimes attract a higher rate of interest. With the growth in both the volume and diversity of consumer debt the exposure of working people to the machinations of fictitious capital has increased greatly in recent years.

However, when we are talking about fictitious capital what more likely springs to mind is not so much our monthly mortgage repayments or our credit card bills but an institution like the stock market. Most ordinary people would have little, if any, direct experience of dabbling in the buying and selling of shares. Essentially the stock market is the domain of the wealthy private investor or else (and to an increasing extent), institutional investors.

The stupendous wealth that can be made on the stock market rams home the point, again and again, that it is not through hard work that one can become incredibly wealthy. This breeds a kind of cynicism towards work born out of the belief that what is officially supposed to motivate us to work is precisely the lure of money. If we go along with that belief, how could we not feel cynical when we see fortunes being made by others who don’t have to lift a finger to do it? When we struggle to pay the bills on the meagre wages we earn it is perhaps understandable that some might feel resentment.

Sometimes, this can be misconstrued as ‘envy’. However, the ‘politics of envy’, as it is called, is an ideological snare and a trap for the unwary. To ‘envy’ someone is to covet what they have and, indeed, to want to become like them (and hence to perpetuate the very system they benefit from). However, it is structurally impossible, not to say nonsensical, for the majority in a capitalist society to find themselves in the same economic position as the minority of being able to live off the unearned income that the majority, after all, provides them with. It is not envy that this majority should feel but, rather, outrage.

Robin Cox

Cooking the Books: Be they dragons? (2024)

The Cooking The Books column from the April 2024 issue of the Socialist Standard

In the November/December issue of the Skeptical Inquirer, Benjamin Radford dealt with a question ‘What do you make of the memes going around comparing billionaires to hoarding dragons and monkeys? Are billionaires hurting the world by hoarding their obscene wealth?’ He answered that billionaires were not like the dragon Smaug in The Hobbit who slept on a hoard of gold as they did not literally ‘hoard’ their wealth. Although he appears to be a supporter of the world as it currently is he made a couple of valid points.

First, that much of the wealth of billionaires is not actual, tangible wealth like gold.

‘Ultra-rich people don’t literally own billions of physical dollars in the way that Smaug physically sits on gold and treasure. Instead, owning five billion dollars and being worth $5 billion on paper are two different things. That’s because the value isn’t tangible. It’s not a zero-sum game in which if you have something (say a house, car or $100 bill) that, by definition, means someone else does not have it. In the case of wealth, a person can (and usually does) get rich when the value of a company’s stock increases. But that increase doesn’t mean that someone else loses money or value if the value of your stocks goes up by $100.’

Radford presents this as a difference between ‘money’ and ‘wealth’, between money as a store of wealth and the price of what a person owns. There is a difference here but between wealth (properly understood as physical things that have a use) and its price. The price of some item of tangible wealth can go up (or down) without affecting the ownership of that wealth. If it goes up, this is a ‘capital gain’ for the owner.

In the case of stocks and shares, what is being bought and sold is not even anything tangible, but the right to draw an income from the production of future tangible wealth, more precisely the expected profits to be made from this. Marx called this ‘fictitious capital’ but a more immediately understandable term might have been ‘notional capital’.

The riches of super-rich individuals like Musk and Bezos are mainly in the form of stocks in the corporations they own. If the price of these goes up then they get richer. Recently, due largely to the quantitative easing, there has been a boom in the price of stocks and shares, resulting in the rich and super-rich getting richer. Thus, calculations have been made of how much Musk’s riches have been increasing per day. It’s $49,439,601 (tinyurl.com/msf5tjf8).

These capital gains don’t represent any increase in real, tangible wealth. Radford is correct in pointing out that they don’t represent wealth that can be hoarded or could be redistributed to others. They don’t deprive anybody of anything. But this doesn’t mean that all the wealth of billionaires exists only as ‘notional capital’. They also have a share of property titles to real tangible wealth, the physical assets (buildings, equipment) of the corporations that they have shares in. They are part of the class that monopolises the means that society needs to use to survive.

Which brings us to Radford’s second point, that hoarding is ‘the last thing that they want to do with their money’:

‘They neither have nor hoard treasure but instead invest their wealth in businesses, which in turn buy equipment and hire employees’.

Exactly. What they want to do with their money is to invest it with a view to making more money. Which is the opposite of hoarding. Unlike ‘capital gains’, profits represent real wealth, a monetary reflection of one part of the real, tangible wealth that employees produce.

Billionaires can be acquitted of the charge of behaving like dragons. But not of being part of the class that monopolises the means of production, to the detriment of the rest of us.

Cooking the Books: Fictitious capital (2009)

The Cooking the Books column from the January 2009 issue of the Socialist Standard

The present crisis has led journalists to look for quotes from Marx. Here’s another example, this time from John Plender of the Financial Times (18 October):

“Karl Marx was wrong about many things, but in 1893 he provided as good an account of today’s financial implosion as any living commentator. “To the possessor of money capital, the process of production appears merely as an unavoidable intermediate link, as a necessary evil for the sake of money-making. All nations with a capitalist mode of production are therefore seized periodically by a feverish attempt to make money without the intervention of the process of production.” (Link.)

Plender was wrong about many things. First, Marx died in 1883 so he could not have written anything in 1893. This was the date that Engels published the second German edition of  Volume II of Capital. Second, it is not even an accurate quote. The first six words are not part of the quote, but something the person Plender was quoting from added in square brackets to introduce the context. Third, the last sentence about “all nations” was added by Engels, as he explained in a footnote (in section 4 of chapter 1).

This said, the passage brings out well that the aim of production under capitalism is not really to make things – that is only incidental – but to make money, more money than those with or controlling money-capital set out with. The source of the added money is the unpaid labour of those who actually produce wealth, the class of wage and salary workers, but this is obscured in financial dealings.

Marx dealt with the illusion that money can give rise to more money without production in Volume III of Capital. Here (chapter 29) he introduced the concept of “fictitious capital”. There is nothing dodgy about such capital. It’s something insurance companies have been doing for years. As Marx explained:

“The formation of a fictitious capital is called capitalization. Every periodic income is capitalized by calculating it on the basis of the average rate of interest, as an income which would be realized by a capital loaned at this rate of interest. For example, if the annual income is £100 and the rate of interest 5%, then the £100 would represent the annual interest on £2,000, and the £2,000 is regarded as the capital-value of the legal title of ownership on the £100 annually. For the person who buys this title of ownership, the annual income of £100 represents indeed the interest on his capital invested at 5%. All connection with the actual expansion process of capital is thus completely lost, and the conception of capital as something with automatic self-expansion properties is thereby strengthened.”.

Examples of this are government bonds, the price of land, and stocks and shares. Marx called these “fictitious” capital because the capital sum did not really exist, only the estimated future income stream did and that depended in the end on future production. In the case of shares, the real capital is in the fixed assets (factories, equipment, machines) and working capital (to buy materials, pay for energy, the wages fund) of the capitalist firm; this capital does not exist a second time in the prices of the shares.

One thing that banks had been doing in recent years was to increase the amount of such fictitious capital by turning mortgage repayments into bonds, “securitising” them in the jargon. If, however, the future income stream is threatened or fails to materialise – as has happened – the fictitious capital so created is depreciated or ceases to exist. But this does not mean that the real capital to which it corresponds has ceased to exist, only that its paper duplicate has gone to money heaven. A reminder that “the conception of capital as something with automatic self-expansion properties” is an illusion.

The rise of fictitious capital (2023)

From the October 2023 issue of the Socialist Standard 

By ‘real capital’ Marx meant money capital invested in physical means of production and the workforce itself with a view to producing commodities to be sold on a market in the expectation of realising a profit – or financial return – from selling them. However, what has become increasingly salient in recent decades is another form of capital that Marx dubbed ‘fictitious capital’.

Fictitious capital does not involve the transformation of money into commodities. It is not about investing in means of production to produce commodities for sale on a market. In this respect it is distinguishable from interest-bearing capital in the form of bank loans to businesses that produce commodities. The latter do not constitute fictitious capital as such.

Bank loans become fictitious capital when they are used for some other purpose than financing the production of commodities. For instance, you might borrow money from a bank to purchase a new car or, indeed, pay off another debt. The bank advances the loan on the understanding that it will be repaid, plus interest, over a certain period; it expects to make a ‘financial return’ no less that a factory producing widgets expects to make a financial return. Marx represented this formulaically as M-M’ where M represents the sum loaned out – the principal – and M’ represents the principal returned to the lender plus interest paid by the borrower out of her wages or savings.

In this scenario no new or additional value has been created – unlike in the case of the M-C-M’ circuit where C is capital invested in physical means of production. There has simply been a net transfer of money from the borrower to the lender. The lender has gained money at the expense of the borrower. While, for Marx, the M-C-M’ circuit quintessentially defines the capitalist mode of production, it is the M-M’ circuit, which starts and finishes with money, that most directly, or overtly, expresses what motivates capitalist production – namely, to make money. In this instance:

‘The production process appears simply as an unavoidable middle term, a necessary evil for the purpose of money-making. This explains why all nations characterised by the capitalist mode of production are periodically seized by fits of giddiness in which they try to accomplish the money making without the mediation of the production process’ (Capital, Vol. 2, Ch.1).

The desire to make money by bypassing the production process, as it were, has become increasing apparent with the growing ‘financialisation’ of the economy. What financialisation does is to drive investors to seek out and promote every conceivable kind of revenue flow – from student debt to mortgage repayments and much more besides – that can be turned into financial assets and bundled up in ways that make then appear more reliable and attractive as a source of future income.

Fictitious capital can be characterised as an outgrowth of the credit system. Traditional bank capital did indeed aid industrial production through the provision of credit to industrial enterprises as Marx noted, even if the banks themselves took a cut from the resulting increase in industrial output. With fictitious capital there is a difference. The tendency is to make money, not out of increased physical output but out of money itself in the form of various revenue streams. The financial instruments available to do this are diverse and evolving and include not just collateralised debt obligations or loans but also bonds, equity stocks and various kinds of derivatives.

If one were to identify a convenient starting point when financialisation began to seriously take off as an economic trend this would probably be the collapse of the Bretton Woods monetary system in the 1970s that had formally linked international currencies to the US dollar (itself convertible into gold up until 1971 when President Nixon abruptly abandoned convertibility). The new system of floating exchange rates paved the way to a sharp rise in currency speculation. In money value terms, the ratio of foreign exchange transactions to the global trade in commodities was 2:1 in 1973. By 2004 it had soared to 90:1 and has since grown even more, making the speculative trading of currencies the world´s biggest market (Firat Demir, ‘The Rise of Rentier Capitalism and the Financialization of Real Sectors in Developing Countries’, Review of Radical Political Economy, September 2007).

Subsequently, financialisation was boosted further by the Big Bang reforms of the late 1980s that deregulated financial markets and made London the leading financial centre in the world. In the wake of these reforms came various technological innovations which have also contributed to the astonishing growth in financial capital. The introduction of computers has given rise to the phenomenon of high frequency trading (HFT) employing digital algorithms to buy and sell financial assets by predicting short-term price movements in shares and identifying potentially lucrative arbitrage opportunities.

Since then, financialisation has, as it were, spilled over and penetrated even what is loosely called the ‘real economy’. Everyone is seemingly getting in on the act — from large retail establishments to manufacturing giants. Financial speculation and the provision of in-house credit are just more arrows to put in their quiver, so to speak — an additional means of making more money in an increasingly competitive world. That has made for a huge expansion in the role that financial intermediaries play within the economy and a notable diversification of the kinds of financial instruments at their disposal. Indeed, this has advanced to such an extent that, according to Ravi Bhandari, there is ‘no longer a purely financial sector (banks, insurance companies, etc.) on the one hand, and a ‘productive’ sector on the other’ (tinyurl.com/3d254kmy).

The stock market has been dubbed a market par excellence for fictitious capital, representing the capitalisation of property rights (as opposed to the capitalisation of production itself in the case of real capital) and, as such, constitutes a market for the circulation of these property rights. These rights, suggested Marx, represent ‘accumulated claims, legal titles, to future production’ and any income resulting from that production:

‘Gains and loss through fluctuations in the price of these titles of ownership… become, by their very nature, more and more a matter of gamble, which appears to take the place of labour as the original method of acquiring capital wealth’ (Capital, Vol.3, Ch.30).

A corporation might well raise funds for investment (real capital) by issuing shares on the stock exchange. By purchasing a share, one then has a claim on the future earnings of this corporation. However, this share does not function as real capital. As Marx explained, the money advanced by investors for the purpose of being used as real capital does not exist twice, ‘once as the capital-value of titles of ownership (stocks) on the one hand and on the other hand as the actual capital invested, or to be invested, in those enterprises’. Real capital ‘exists only in the latter form’ and a share represents merely a ‘title of ownership to a corresponding portion of the surplus-value to be realised by it’ (Capital, Vol 3, Ch 29).

The shareholders will hope that, in addition to receiving dividends, the value of their shares will appreciate over time, enabling them to realise a capital gain if and when the shares are sold on the stock market (in the case of a ‘public’ company). The rise or fall in the value of this fictitious asset — the shareholder certificate — representing the capitalisation of anticipated income streams can sometimes bear little apparent relation to current movements in the real economy. The secondary market in the buying and selling of these financial assets is essentially driven by market expectations of future profitability, and this can have a speculative element.

That helps to explain the rather puzzling coincidence of a buoyant stock market with share prices sometimes reaching record highs alongside a real economy that shows every sign of being in the doldrums. A different kind of logic applies in each case. ‘Autonomisation’ is the buzzword to describe the tendency for fictitious capital to strive to transcend or unshackle itself from real capital in the business of money making.

Though ultimately fictitious capital cannot sever itself from developments impacting on real capital, there does, at times, appear to be a certain disconnection between them. Speculative activity that grew out of the very system of credit that financed industrial development can, at times, become frenzied and take the form of speculative bubbles – from the Dutch tulipmania bubble (1634-38) through to the internet-based Dot-Com bubble of the late 1990s, and many more besides. Inevitably these burst at some point when, as Marx noted, the magic of compound interest breaks down as, indeed, it eventually must.

In the meanwhile, as far as these paper claims to future income that constitute fictitious capital are concerned:

‘To the extent that the depreciation or increase in value of this paper is independent of the movement of value of the actual capital that it represents, the wealth of the nation is just as great before as after its depreciation or increase in value’ (Capital, Vol. 3, Ch. 29).

The belief that wealth can be created merely by making money from money is akin to the medieval belief in alchemy – that you can transform base metals into gold.

It is the investment of this ‘real capital’ that generates the surplus value the system fundamentally depends on. This presupposes the employment of wage labour to create the surplus value out of which such capital originates in the first place.

Fictitious capital, on the other hand, does not and cannot create surplus value at all but at best merely redistributes it amongst fractions of the capitalist class.

Robin Cox