Fictitious capital, the credit system, and the particular case of government bonds in Marx

ABSTRACT This paper is a theoretical contribution to the development and update of Marx’s theory of money and credit, given the empirical developments in finance since the 1970s. It expands on the discussion of fictitious capital and government bonds within the Marxian literature. In contrast with most Marxian literature and some of Marx’s own writings on the topic, I argue that fictitious capital does not represent any real capital and then further develop the idea that fictitious capital is the channel through which the dominance of interest-bearing capital over other forms of capital occurs. This interpretation lays the foundation for understanding why government bonds, as titles of fictitious capital, are the keystone of financial markets and an unavoidable source for both financial accumulation and exploitation, rather than being a mere consequence of state spending. For this reason, public debt can neither be avoided nor fully paid off.