David Shemano wrote:
> Why? Why is it a good thing that economic activity be
> financed by debt instead of equity?
Again, I agree with the thrust of David's argument, although the
ultimate reasons may differ.
In my view, debt adds a thick layer of mysticism to the form in which
wealth is appropriated under capitalism. It gives debt holders the
impression that their share of the net social benefits of using wealth
(productively or consumptively) is immune from the volatility inherent
to it. It makes it seem as if debt holders are capable of defying the
law of social gravity.
And this is aside from the fact that, as Marx noted in volume 3 (ch
27, I think) of Capital, the development of joint-stock capital (the
earlier English form of modern corporate equity) represented a leap
forward in adjusting the legal and economic structures of capitalism
to the demands imposed by the large-scale industrial development of
the productive forces of labor. Marx called it the "abolition of
capitalist production within the confines of capitalist production."
And yes, that is the adjustment of the legal/financial superstructure
to shifts in the "micro" benefits and costs ("incentives") across
various social structures. Without separating the management of
wealth from its legal ownership, capitalism would have been stunted.
Of course, equity is still highly mystifying. E.g. it impresses on
people the notion that exclusive or private ownership is either the
creation of the state or some "natural right." But it is a step in the
right direction, within the narrow bounds of capitalism. Essentially,
debt and equity are both legal fictions (not that fictions don't have
a socially-objective basis) obscuring the effective appropriation of
wealth by the few at the exclusion of most people.
In the face of the crisis, arguing on minute technical grounds about
the pluses and minuses of debt vs. equity within the framework of
capitalism is not that different from the way Tom Tomorrow's Actions
McNews Network deals with the impending extinction of all life on
earth:
http://www.dailykos.com/story/2012/03/19/1075036/-The-question-on-everyone-s-mind
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