Fictitious Capital

Abstract

The concept of ‘fictitious capital’ is rarely used by economists today. According to the rather small, though diverse, group of authors who have used the notion, it refers to the finance of productive activity by means of credit. Whatever their differences, all authors contrast ‘fictitious capital’ with ‘real capital’, where the latter usually refers to produced means of production, but may also include what Marxists call ‘money-capital’. One group of authors contrasts finance by means of fictitious capital with voluntary (i.e. not forced) saving of the means of production. Hayek (1939) is a member of this group and refers to Viner’s (1937) brief discussion of the use of the concept by English economists (e.g. by Lauderdale and Ricardo). On the other hand, Marx (1894), and Hilferding (1910), analyse the concept of ‘fictitious capital’ with respect to different forms of ‘borrowed capital’ and to the significance of the market value of financial titles and their relation to the value produced by labour.