Young Master Smeet wrote:He
Young Master Smeet wrote:
He seems to be suggesting that the paper value of such capital depends on the prevailing rate of interest (which is itself a dependent but arbitrary aspect of the overall rate of profit).
He says so explicitly later on in the same chapter:
Quote:
The formation of a fictitious capital is called capitalisation. Every periodic income is capitalised by calculating it on the basis of the average rate of interest, as an income which would be realised by a capital loaned at this rate of interest. For example, if the annual income is £100 and the rate of interest 5%, then the £100 would represent the annual interest on £2,000, and the £2,000 is regarded as the capital-value of the legal title of ownership on the £100 annually. For the person who buys this title of ownership, the annual income of £100 represents indeed the interest on his capital invested at 5%
This is the conventional definition of "capitalization" (which can be applied to any regular stream of income) but I think that "notional capital" would have been a better term than "fictional capital" (given what Marxists tempted by currency crankism, and even those not, have made of this term).