> Karl: Am not sure what you are saying here. Basically, in Marx, fictitious capital is any income that is mathematically "backed out" of (capitalized out of) any security. As far as fictitious capital goes, for Marx there is no difference between state debt (ie treasury bills and bonds), corporate paper and stock (in fact, state debt is "worse"--as for the von Mises folks). None of them are secured by actually existing buildings, machines, etc., the way a loan that takes, say, a machine or building as collateral is. Likewise, any money (or money-substitute) that is not backed by gold (ie bills of exchange) is also fictitious.
> The reference to the right wing > element that you label monetary cranks may echo Marx simply because Marx's > understanding is correct. You seem to be critical of Marx's conception of > certain forms of paper as fictitious capital. To respond to this you will > need to elaborate what it is you mean. I do agree that Marx theory of > fictititious capital needs to be re-examined. Much of the time it is a > standard assumption by much Marxism in its analysis of economic development. I'm critical of the distinction because it damns central banks for mediating crises or potentially critical situations, with the hope (or a hope dressed as an assertion) that, absent such intervention, the "big one" would finally arrive, the working class would claim its alienated historical destiny, and all would finally be well. As if what we really needed were more 19th-century style booms and busts to advance a political project. This is just precisely what the von Mises folks argue, the difference being that for them, in the absence of the Fed, the market would finally reflect the moral order of the universe because everything would instantaneously embody its market value. Tell that to the people in South Korea whose jobs were saved by the fact that AG lowered interest rates in November of 1998, despite low US unemployment. The Fed may be guilty of being too restrictive in the most recent cycle, as Jim and Ellen Frank have argued. But AG also defied conventional wisdom for the better part of 2 years by letting interest rates remain low even though unemployment was dropping. Christian
