# Fictitious capital

Part of a series on :
Marxism :
Theoretical works
Economic and Philosophic Manuscripts of 1844
The Condition of the Working Class in England
The German Ideology
The Communist Manifesto
The Eighteenth Brumaire of Louis Bonaparte
Grundrisse
Capital
Critique of the Gotha Programme
Dialectics of Nature
The Origin of the Family, Private Property and the State
What Is to Be Done?
The Accumulation of Capital
Philosophical Notebooks
Terrorism and Communism
The State and Revolution
Essays on Marx's Theory of Value
History and Class Consciousness
Prison Notebooks
The Black Jacobins
On Practice
Theses on the Philosophy of History
Dialectic of Enlightenment
A Critique of Soviet Economics
The Long Revolution
Guerrilla Warfare
The Wretched of the Earth
Reading Capital
The Society of the Spectacle
Pedagogy of the Oppressed
Ideology and Ideological State Apparatuses
Ways of Seeing
How Europe Underdeveloped Africa
Social Justice and the City
Women, Race and Class
Marxism and the Oppression of Women
Imagined Communities
Hegemony and Socialist Strategy
The Sublime Object of Ideology
Time, Labor and Social Domination
The Age of Extremes
The Origin of Capitalism
Empire
Late Victorian Holocausts
Change the World Without Taking Power
Caliban and the Witch
An Introduction to the Three Volumes of Karl Marx's Capital
Capitalist Realism
Capital in the Anthropocene
Towards Socialism or Capitalism?
The Revolution Betrayed
Literature and Revolution
The Struggle Against Fascism in Germany
Their Morals and Ours: The class foundations of moral practice :
Philosophy
Alienation
Dialectical materialism
Ideology
Philosophy of nature
Philosophy in the Soviet Union
Reification
Marxist ethics :
Critique of political economy
Capital (accumulation)
Crisis theory
Commodity
Concrete and abstract labor
Factors of production
Falling profit-rate tendency
Means of production
Mode of production
Capitalist
Socialist
Productive forces
Scientific socialism
Surplus product
Socially necessary labour time
Value-form
Wage labour :
Sociology
Base and superstructure
Bourgeoisie
Class
Class consciousness
Classless society
Commodity fetishism
Communist society
Critical theory
Cultural hegemony
Democracy
Dictatorship of the proletariat
Soviet
Radical
Democratic centralism
Exploitation
False consciousness
Human nature
Immiseration
Imperialism
Lumpenproletariat
Metabolic rift
Proletariat
Private property
Relations of production
State theory
Working class :
History
Class struggle
Historical determinism
Primitive accumulation
Proletarian revolution
World revolution
Theory of historical trajectory :
Aspects
Aesthetics
Archaeology
Criminology
Cultural analysis
Cultural Studies
Ethics
Film theory
Geography
Historiography
Literary criticism
Marxism and religion
Sociology
Philosophy :
Common variants
Structural
Autonomist
Marxism–Leninism
Guevarism
Maoism
Titoism
Trotskyism
Neo-Gramscianism
Regulation school
Third-worldist
Hegelian
Budapest School
Frankfurt School
Humanist
Neue Marx-Lektüre
Open
Political
Praxis School
Both
Black
Classical
Communization
Feminist
Leninism
Neo
Post
Western :
Other variants
Analytical
Austromarxism
Centrist
Council communism
Eurocommunism
Instrumental
Marxism–Leninism–Maoism
Nkrumaism
Orthodox
Revisionist
Situationist
Socialism with Chinese characteristics
Wertkritik :
People
Marx
Engels
Morris
Lafargue
Rubin
Kautsky
Plekhanov
Du Bois
Connolly
Lenin
Luxemburg
Liebknecht
Kollontai
Bogdanov
Stalin
Trotsky
Grossman
Zinoviev
Bloch
Lukács
Korsch
Bukharin
Ho
Serge
Gramsci
Galiev
Pashukanis
Bordiga
Benjamin
Mao
Basu
Mariátegui
Horkheimer
Dutt
Brecht
Marcuse
Kalecki
Fromm
Cox
Lefebvre
James
Adorno
Padmore
Sartre
Deutscher
Hoxha
Beauvoir
Sombart
Nkrumah
Sweezy
Emmanuel
Hill
Bettelheim
Draper
Jones
Hobsbawm
Althusser
Hinton
Williams
Freire
Mandel
Sivanandan
Miliband
Cabral
Thompson
Bauman
Fanon
Kosik
Berger
Castro
Guevara
Liebman
Heller
Guattari
Mészáros
O'Connor
Wallerstein
Mies
Tronti
Debord
Amin
Hall
Nairn
Parenti
Negri
Jameson
Gonzalo
Dussel
Harvey
Laclau
Bahro
Poulantzas
Vattimo
Badiou
Harnecker
Altvater
Anderson
Löwy
Vogel
Sison
Easthope
Rancière
Berman
Przeworski
Cohen
Therborn
Losurdo
Ture
Postone
Rodney
Bannerji
Spivak
Newton
Sakai
Wood
Federici
Wolff
Balibar
Eagleton
Kurz
Hartsock
Rowbotham
Mouffe
Geras
Brenner
Davis
Massey
Cleaver
Bishop
Haraway
Panitch
Clarke
Jessop
Davis
Wright
Fraser
Burawoy
Holloway
Rose
Screpanti
Tamás
Hampton
Cano
Žižek
Berardi
Sankara
Hennessy
McDonnell
Douzinas
Roediger
Foster
West
Ghandy
Marcos
Heinrich
Prashad
Kelley
Dean
Lordon
Linera
Fisher
Li
Coulthard
Malm
Seymour
Toscano
Bhattacharya
Moufawad-Paul
Srnicek
Horvat
Hamza
Saito :
Journals
Antipode
Capital & Class
Capitalism Nature Socialism
Constellations
Critique: Journal of Socialist Theory
Historical Materialism
Mediations
Monthly Review
New Left Review
Race & Class
Rethinking Marxism
Science & Society
Socialist Register :
Related topics
21st-century communist theorists
Anarchism
Creative destruction
Conflict theory
Criticism of Marxism
Communism
Communalism
Economic determinism
History of communism
Left-wing politics
Marxian economics
New Left
Old Left
Municipalism
Political ecology
Socialism
Authoritarian
Democratic
Market
Reformist
Revolutionary
Social
Utopian
Left-wing populism
Universal class
Vulgar Marxism
Economism
Worker cooperative
Workers' council :
Outline
Communism portal
Philosophy portal
Socialism portal :
vte :
Fictitious capital (German: fiktives Kapital) is a concept used by Karl Marx in his critique of political economy. It is introduced in chapter 25 of the third volume of Capital. Fictitious capital contrasts with what Marx calls "real capital", which is capital actually invested in physical means of production and workers, and "money capital", which is actual funds being held. The market value of fictitious capital assets (such as stocks and securities) varies according to the expected return or yield of those assets in the future, which Marx felt was only indirectly related to the growth of real production. Effectively, fictitious capital represents "accumulated claims, legal titles, to future production" and more specifically claims to the income generated by that production.
* Fictitious capital could be defined as a capitalisation on property ownership. Such ownership is real and legally enforced, as are the profits made from it, but the capital involved is fictitious; it is "money that is thrown into circulation as capital without any material basis in commodities or productive activity".
* Fictitious capital could also be defined as "tradeable paper claims to wealth", although tangible assets may themselves under certain conditions also be vastly inflated in price.
In terms of mainstream financial economics, fictitious capital is the net present value of expected future cash flows.

## Uses of the term

Marx saw the origin of fictitious capital in the development of the credit system and the joint-stock system.
"The formation of a fictitious capital is called capitalisation." It represents a claim to property rights or income. Such claims can take many forms, for example, a claim on future government tax revenue or a claim issued against a commodity that remains, as yet, unsold. The stocks, shares and bonds issued by companies and traded on stock markets are also fictitious capital.
A company may raise (non-fictitious) capital by issuing stocks, shares and bonds. This capital may then be used to generate surplus value, but once this capital is set in motion, the claims held by the owners of the share certificate, etc., are simply "marketable claims to a share in future surplus value production". The stock market "is a market for fictitious capital. It is a market for the circulation of property rights as such".
Since the value of these claims does not function as capital, is merely a claim on future surplus, "the capital-value of such paper is...wholly illusory... The paper serves as title of ownership which represents this capital.
The stocks of railways, mines, navigation companies, and the like, represent actual capital, namely, the capital invested and functioning in such enterprises, or the amount of money advanced by the stockholders for the purpose of being used as capital in such enterprises...; but this 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." The capital "exists only in the latter form", while the stock or share "is merely a title of ownership to a corresponding portion of the surplus-value to be realised by it".
The formation of fictitious capital is, for Marx, linked to the wider contradiction between the financial system in capitalism and its monetary basis. Marx writes: "With the development of interest-bearing capital and the credit system, all capital seems to double itself, and sometimes treble itself, by the various modes in which the same capital, or perhaps even the same claim on a debt, appears in different forms in different hands. The greater portion of this 'money-capital' is purely fictitious. All the deposits, with the exception of the reserve fund, are merely claims on the banker, which, however, never exist as deposits." The expansion of the credit system can, in periods of capitalist expansion, be beneficial for the system; but in periods of economic crisis and uncertainty, capitalists tend, Marx argues, to look to the security of the "money-commodity" (gold) as the ultimate measure of value. Marx tends to assume the convertibility of paper money into gold. However, the modern system of inconvertible paper money, backed by the authority of states, poses greater problems. Here, in periods of crisis, "the capitalist class appears to have a choice between devaluing money or commodities, between inflation or depression. In the event that monetary policy is dedicated to avoiding both, it will merely end up incurring both".
The term is also used by the economist Cédric Durand as the title of a 2017 book, Fictitious Capital: How Finance Is Appropriating Our Future. The book argues government intervention allows fictitious capital to "assume proportions incompatible with the real production potential of economies," leading inevitably to crises such as the Great Recession.

## Speculation

Profit can be made purely from trading in a variety of financial claims existing only on paper. This is an extreme form of the fetishism of commodities in which the underlying source of surplus-value in exploitation of labour power is disguised. Indeed, profit can be made by using only borrowed capital to engage in (speculative) trade, not backed up by any tangible asset.
The price of fictitious capital is governed by a series of complex determinants. In the first instance they are governed by the "present and anticipated future incomes to which ownership entitles the holder, capitalised at the going rate of interest". But fictitious capital is also the object of speculation. The market value of such assets can be driven up and artificially inflated, purely as a result of supply and demand factors which can themselves be manipulated for profit. The inflated value can just as rapidly be punctured if large amounts of capital are withdrawn.

## Illustrations
### Banking

Marx cites the case of a Mr Chapman who testified before the British Bank Acts Committee in 1857:
"though in 1857 he was himself still a magnate on the money market, [Chapman] complained bitterly that there were several large money capitalists in London who were strong enough to bring the entire money market into disorder at a given moment and in this way fleece the smaller money dealers most shamelessly. There were supposed to be several great sharks of this kind who could significantly intensify a difficult situation by selling one or two million pounds worth of Consols and in this way taking an equivalent sum of banknotes (and thereby available loan capital) out of the market. The collaboration of three big banks in such a manoeuvre would suffice to turn a pressure into a panic."
Marx added that:
"The biggest capital power in London is of course the Bank of England, but its position as a semi-state institution makes it impossible for it to assert its domination in so brutal a fashion. Nonetheless, it too is sufficiently capable of looking after itself... Inasmuch as the Bank issues notes that are not backed by the metal reserve in its vaults, it creates tokens of value that are not only means of circulation, but also forms additional - even if fictitious - capital for it, to the nominal value of these fiduciary notes, and this extra capital yields it an extra profit."

### Public stocks

Marx writes:
"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.
"The public stocks and canal and railway shares had already by the 23rd of October, 1847, been depreciated in the aggregate to the amount of £114,752,225." (Morris, Governor of the Bank of England, testimony in the Report on Commercial Distress, 1847-48 [No. 3800].)
"Unless this depreciation reflected an actual stoppage of production and of traffic on canals and railways, or a suspension of already initiated enterprises, or squandering capital in positively worthless ventures, the nation did not grow one cent poorer by the bursting of this soap bubble of nominal money-capital."

### Housing and Fixed Capital

In 2024, Elliot Goodell Ugalde argued that the misalignment between housing's exchange value and its soaring market prices indicates the presence of fictitious capital and can be contextualized within the framework of Marx's Labour Theory of Value (LTOV) as explored in his analysis of Vancouver’s housing crisis. According to Goodell Ugalde, this phenomenon reflects a fundamental contradiction within capitalist systems, particularly when applied to housing as a commodity. Housing, unlike typical commodities, is tethered to land—a finite resource that resists the traditional dynamics of supply and demand economics.
In Marxist terms, the exchange value of housing, which derives from the socially necessary labor time required for its production, should theoretically dictate its price under normal market conditions. However, in speculative housing markets like Vancouver, the detachment between exchange value and market price becomes starkly evident. The perpetual increase in market prices, even for unoccupied units, reflects the formation of fictitious capital—an inflation of asset values that bears little relation to the actual productive value of the underlying commodity. This inflation is driven by speculative investments and property hoarding, practices that exploit the appreciating nature of land-linked commodities.
Goodell Ugalde’s argument is further reinforced by the observation that housing markets dominated by monopolistic or oligopolistic entities manipulate supply to sustain high market prices. The strategic withholding of properties, a practice aligned with Marx's theory of absolute rent, creates artificial scarcity that drives up rental costs irrespective of actual demand. This manipulation underscores the failure of orthodox economic frameworks, which assume that increasing supply will naturally stabilize or reduce prices.
By framing housing within Marx's critique of capitalist contradictions, Goodell Ugalde highlights the systemic issues inherent in treating housing as a commodity subject to market forces. Unlike other commodities, housing's market price often appreciates over time, incentivizing capital accumulation without the risk of overproduction crises that typically afflict other goods. This dynamic encourages speculative bubbles, further inflating prices and exacerbating the housing affordability crisis.