Tag: investing

Financial Capital.  A Speculative Bubble. 

~ nicholasjayboyes

At the start of what is looking like what could be a crisis,  the question is if the financial bubble will burst.   The speculation on financial capital is reaching a fevered pitch, with investment in money capital feeding a market that is now further and further away from industrial capital, and is producing a mountain of financial services, hedge funds, money markets, etc.

The bourgeois are in bonds heavily too, speculating on the ability of the state to be able to pay off its debts, with the interest paid for by taxes.

The purpose of circulation capital, merchants capital, is to make the turnover of capital occur more smoothly.  Credit and the large banks are also connected with this, they use the stored money to do banking operations that include loaning out money to capitalists to smooth the exchange of commodities.

But beyond this lies the world of joint stock companies, which are simply companies with several owners.  The stock is a title to ownership of the company, and the companies control capital.

But is all this buying and selling of stocks really a movement of industrial capital?  

To some degree yes.  But it is invested in by money market funds, and other financial services that draw interest from industrial capital.  They are a cost of production, and we should always remember the value of a commodity is the amount of labour contained in it, whether or not it is paid for.  David Ricardo showed us this in his Principles of Political Economy and Taxation.  Clearly circulating capital does not miraculously create value; the exchange of commodities does not create surplus value, what Ricardo called profit (surplus value).  The surplus value is the unpaid section of the workday, based on the amount of labour required to produce a commodity. Profit is calculated on the whole capital expenditure, including the means of production and raw materials.

All this speculation and corresponding financial capital has formed a bubble, and in the end, if it breaks, industrial capital will be all that remains.  And if you are a country that has leveraged other countries resources, with money from the home country, importing much more than exporting, financial capital becomes increasingly more important.

The question becomes how much financial capital has accumulated, and what happens when there is overproduction, and crisis occurs.  At this point large amounts of capital are destroyed, we saw this as the markets were crashing of late. The money is just wiped off, the financial capital rendered useless paper. 

Perhaps this is due to the fact the bank does not produce commodities, rather it is connected with merchant capital, circulating capital.  It also makes the process of production turn over more quickly by means of credit, making turnover more smoothly than if the industrial capitalist had to be the one who had to sell his own commodity.

The banks also invest financial capital in industry, in the 20th century they were quickly becoming ever more powerful.  The ability to gain seats in joint stock companies led to the monopoly conditions, led by JP Morgan, who controlled US Steel, most of the eastern railways, General Motors, etc.  Financial capital was connected with this, he used credit to buy companies, which he obtained through the bank. 

But the question remains how much is financial capital used to simply turnover commodities?  The stock market is still called the ‘“Stock Exchange”, implying something tangible is being exchanged. 

“What does a mercantile exchange do?

“The Merc trades several types of financial instruments: interest rates, equities, currencies, and commodities.

Google search mercantile exchange

“Equities, also known as stocks, represent an ownership stake in a company, giving investors a claim on the company’s assets and earnings. Investors purchase equities to gain potential returns through capital appreciation (an increase in share price) and dividends. The value of equities fluctuates based on market demand, company performance, and economic conditions, making them a popular but inherently risky investment.”

Google search equities

Equities seem to now equal stocks., as the jargon in capitalism changes sometimes; Milton Keynes would have been proud of this one. People buy stocks “to gain potential returns through capital appreciation (an increase in share price) and dividends.”

“Capital appreciation is the increase in an investment’s market value over time, leading to a higher price than its original purchase price. This growth occurs due to factors like increased demand, better asset performance, or favorable market conditions. Investors seek capital appreciation for passive growth, while the actual profit realized from selling an asset is known as a capital gain.”

Google search capital appreciation

So now we know profit results from selling an asset, which is an active relationship of the owner of stocks to his glorified hoard.

“Passive growth” refers to growth achieved without continuous, active effort, appearing in several contexts including investment strategies where wealth accumulates over time with minimal management)….

Google search passive growth

And naturally investors in stocks want to think or do as little as possible, and still be able to wring the surplus value out of the workers, whose labour represent the profit..

” increased demand, better asset performance, or favorable market conditions” as reasons for the exploitation of the proletariat is not clear. There are conditions which make it easier or harder for the bourgeois to reap the profits from is ownership of means of production, referred here to as assets. Sort of a more technical term for the accumulation of capital in stock, obtained upon selling, “capital gain”.

google’s explanations are always witty. I don’t know who writes them. It would not seem to be a task to just let a computer so to say wax philosophically ab.out

The bubble occurs when financial capital is divorced from reality, when circulating capital starts to cease to function,

But it is definitely better to be a producer of commodities than a financial capitalist speculating on  the price of commodities when the crisis comes.  I think that  should be obvious, the bubble may break, and the speculation on financial capital becomes more risky.  The next stage will be in production, when the companies who all rely on China for cheap raw materials and machinery have to pay double for them (Trump’s now on now off again tariffs in 2025).  .   The financial capital may cushion the blow, but when the merchant cannot pay the bill at the port, his creditors will be the first to react.  The spectacle of yards in port, parked, waiting for a consumer, and conversely a working class suffering layoffs and loss of employment, the result of the speculative bubble breaking.  

And there are the exports to China, now tariffed 138% by them to enter, now not tariffed, etc. .   America produces commodities China uses, they may have a huge deficit in overall trade, but they still rely on products from America.  Overproduction will likely occur here too, unless new markets are found for finished commodities. As far as commodities produced in both countries jointly, the tariff would be a real impediment to production.

The speculation on financial capital has created  a bubble.  Overproduction is looking likely, we will probably again see the state in its role to bail out the failing companies and agriculture. We see this taking effect in regard to the threat by Trump to lower the price of money to banks to near nothing. A large subsidy to capitalist industry.  It is also a clever way to use the states money, the segment of surplus value separated off and called taxes, by alternately pulling the taxes out of the surplus value, then returning them to capitalists who are having trouble making a profit. The only question is, is it using the state money to make a profit? The bourgeois has a fetish about state assets capable of making a profit, they are sold off, often at bargain basement prices, to any capitalist who wants to take the risk of running them. I fit is the state making money here, it is quite clever. But it is also not capitalism.

Generally it is agriculture that is subsidized and bailed out; the milk wasted and dumped as it cannot be sold at $2.19 a gallon.  The government paying farmers to dump the milk. At the same time the soup kitchens with long lines, often outdoors in winter.

This is a recurring feature of capitalism.  It may be here again, crisis.  If it is, it was sparked by Donald Trump’s protectionism.  The taxes on imports could cause overproduction, social overproduction, at home and abroad.  He backed off this time, but it could be enough to cause confidence investors had in dealing with Americans to be depleted; how can they be trusted? It is a crisis at least partially of their own making.  

Nicholas Jay Boyes 

Milwaukee Wisconsin

American Democratic Republic

edit 9 13 2025

Financial Capital.  A Speculative Bubble. 

~ nicholasjayboyes

At the start of what is looking like what could be a crisis,  the question is if the financial bubble will burst.   The speculation on financial capital is reaching a fevered pitch, with investment in money capital feeding a market that is now further and further away from industrial capital, and is producing a mountain of financial services, hedge funds, money markets, etc.

The bourgeois are in bonds heavily too, speculating on the ability of the state to be able to pay off its debts, with the interest paid for by taxes.

The purpose of circulation capital, merchants capital, is to make the turnover of capital occur more smoothly.  Credit and the large banks are also connected with this, they use the stored money to do banking operations that include loaning out money to capitalists to smooth the exchange of commodities.

But beyond this lies the world of joint stock companies, which are simply companies with several owners.  The stock is a title to ownership of the company, and the companies control capital.

But is all this buying and selling of stocks really a movement of industrial capital?  

To some degree yes.  But it is invested in by money market funds, and other financial services that draw interest from industrial capital.  They are a cost of production, and we should always remember the value of a commodity is the amount of labour contained in it, whether or not it is paid for.  David Ricardo showed us this in his Principles of Political Economy and Taxation.  Clearly circulating capital does not miraculously create value; the exchange of commodities does not create surplus value, what Ricardo called profit (surplus value).  The surplus value is the unpaid section of the workday, based on the amount of labour required to produce a commodity. Profit is calculated on the whole capital expenditure, including the means of production and raw materials.

All this speculation and corresponding financial capital has formed a bubble, and in the end, if it breaks, industrial capital will be all that remains.  And if you are a country that has leveraged other countries resources, with money from the home country, importing much more than exporting, financial capital becomes increasingly more important.

The question becomes how much financial capital has accumulated, and what happens when there is overproduction, and crisis occurs.  At this point large amounts of capital are destroyed, we saw this as the markets were crashing of late. The money is just wiped off, the financial capital rendered useless paper. 

Perhaps this is due to the fact the bank does not produce commodities, rather it is connected with merchant capital, circulating capital.  It also makes the process of production turn over more quickly by means of credit, making turnover more smoothly than if the industrial capitalist had to be the one who had to sell his own commodity.

The banks also invest financial capital in industry, in the 20th century they were quickly becoming ever more powerful.  The ability to gain seats in joint stock companies led to the monopoly conditions, led by JP Morgan, who controlled US Steel, most of the eastern railways, General Motors, etc.  Financial capital was connected with this, he used credit to buy companies, which he obtained through the bank. 

But the question remains how much is financial capital used to simply turnover commodities?  The stock market is still called the ‘“Stock Exchange”, implying something tangible is being exchanged. 

“What does a mercantile exchange do?

“The Merc trades several types of financial instruments: interest rates, equities, currencies, and commodities.

Google search mercantile exchange

“Equities, also known as stocks, represent an ownership stake in a company, giving investors a claim on the company’s assets and earnings. Investors purchase equities to gain potential returns through capital appreciation (an increase in share price) and dividends. The value of equities fluctuates based on market demand, company performance, and economic conditions, making them a popular but inherently risky investment.”

Google search equities

Equities seem to now equal stocks., as the jargon in capitalism changes sometimes; Milton Keynes would have been proud of this one. People buy stocks “to gain potential returns through capital appreciation (an increase in share price) and dividends.”

“Capital appreciation is the increase in an investment’s market value over time, leading to a higher price than its original purchase price. This growth occurs due to factors like increased demand, better asset performance, or favorable market conditions. Investors seek capital appreciation for passive growth, while the actual profit realized from selling an asset is known as a capital gain.”

Google search capital appreciation

So now we know profit results from selling an asset, which is an active relationship of the owner of stocks to his glorified hoard.

“Passive growth” refers to growth achieved without continuous, active effort, appearing in several contexts including investment strategies where wealth accumulates over time with minimal management)….

Google search passive growth

And naturally investors in stocks want to think or do as little as possible, and still be able to wring the surplus value out of the workers, whose labour represent the profit..

” increased demand, better asset performance, or favorable market conditions” as reasons for the exploitation of the proletariat is not clear. There are conditions which make it easier or harder for the bourgeois to reap the profits from is ownership of means of production, referred here to as assets. Sort of a more technical term for the accumulation of capital in stock, obtained upon selling, “capital gain”.

google’s explanations are always witty. I don’t know who writes them. It would not seem to be a task to just let a computer so to say wax philosophically ab.out

The bubble occurs when financial capital is divorced from reality, when circulating capital starts to cease to function,

But it is definitely better to be a producer of commodities than a financial capitalist speculating on  the price of commodities when the crisis comes.  I think that  should be obvious, the bubble may break, and the speculation on financial capital becomes more risky.  The next stage will be in production, when the companies who all rely on China for cheap raw materials and machinery have to pay double for them (Trump’s now on now off again tariffs in 2025).  .   The financial capital may cushion the blow, but when the merchant cannot pay the bill at the port, his creditors will be the first to react.  The spectacle of yards in port, parked, waiting for a consumer, and conversely a working class suffering layoffs and loss of employment, the result of the speculative bubble breaking.  

And there are the exports to China, now tariffed 138% by them to enter, now not tariffed, etc. .   America produces commodities China uses, they may have a huge deficit in overall trade, but they still rely on products from America.  Overproduction will likely occur here too, unless new markets are found for finished commodities. As far as commodities produced in both countries jointly, the tariff would be a real impediment to production.

The speculation on financial capital has created  a bubble.  Overproduction is looking likely, we will probably again see the state in its role to bail out the failing companies and agriculture. We see this taking effect in regard to the threat by Trump to lower the price of money to banks to near nothing. A large subsidy to capitalist industry.  It is also a clever way to use the states money, the segment of surplus value separated off and called taxes, by alternately pulling the taxes out of the surplus value, then returning them to capitalists who are having trouble making a profit. The only question is, is it using the state money to make a profit? The bourgeois has a fetish about state assets capable of making a profit, they are sold off, often at bargain basement prices, to any capitalist who wants to take the risk of running them. I fit is the state making money here, it is quite clever. But it is also not capitalism.

Generally it is agriculture that is subsidized and bailed out; the milk wasted and dumped as it cannot be sold at $2.19 a gallon.  The government paying farmers to dump the milk. At the same time the soup kitchens with long lines, often outdoors in winter.

This is a recurring feature of capitalism.  It may be here again, crisis.  If it is, it was sparked by Donald Trump’s protectionism.  The taxes on imports could cause overproduction, social overproduction, at home and abroad.  He backed off this time, but it could be enough to cause confidence investors had in dealing with Americans to be depleted; how can they be trusted? It is a crisis at least partially of their own making.  

Nicholas Jay Boyes 

Milwaukee Wisconsin

American Democratic Republic

edit 9 13 2025