Cooking the Books 1 – Unfair Shares

‘The world’s 10 richest people added $402 billion to their fortunes in 2021’, CNBC reported on 30 December. ‘They were led by Tesla CEO Elon Musk, who this year became the world’s richest man and briefly saw his net worth top $300 billion. He added $121 billion to his net worth in 2021 — just shy of the $140 billion he added in 2020’ (

This way of putting it is misleading, though not as bad as saying that these multibillionaires ‘earned’ it. Musk did nothing to add to his ‘net worth’. It just got added as the market price of the shares he owns in Tesla and other companies happened to increase by the end of 2021 compared to what it had been at the beginning. The increase doesn’t necessarily even represent any increase in real wealth as it does not correspond to an increase in anything useful made from materials that originally came from nature.

The Independent (13 October), carried an article, ‘How much does Jeff Bezos make per minute?’ It distinguished between his income and his ‘net worth’ and calculated his total income as $1,691,840 a year, or $3.20 a minute. This is the money Bezos, then the richest man in the world, had in 2020 to spend on his personal luxuries such as a space trip or to invest. The increase in his net worth, however, was calculated as $75 billion, or $142,667 a minute, over 44 times as much ( Musk’s income in 2020, at $595 million, was rather more but still only a fraction of the $140 billion his net worth increased by that year.

As an individual’s net worth is calculated by multiplying the number of shares they hold by their current market price, what we are talking about here is an increase in the price of the shares these multibillionaires own. A share is principally a claim on the future profits on the capital invested by the business concerned, or, as Marx put it, ‘merely a title of ownership to a corresponding portion of the surplus value realised by it.’

The market price of a share is the income as profit that it is expected to bring, converted into a capital sum. This is brought about by the play of supply and demand on the stock exchange, with demand influenced by possible future profits and so includes a large element of speculation. Marx called the capital sum resulting from converting future profits in this way ‘fictitious capital’, fictitious in the sense that it did not simply represent actual capital invested in exploiting wage-labour for surplus value. It principally represented claims on future wealth; in other words, on wealth that does not exist as yet:

‘Even when the promissory note — the security — does not represent a purely fictitious capital, as it does in the case of state debts, the capital-value of such paper is nevertheless wholly illusory’ (Capital, Vol. 3, ch. 29).

What is ‘illusory’ is not the legal title to a future income stream from surplus value nor its worth, but that the market price of shares represents real wealth in addition to the net value of the capital in the enterprise; even more illusory is the idea that an increase in the market price of these legal titles represents an increase in wealth.

If all stocks, shares and bonds were to disappear the amount of wealth in the world, that is, wealth that can be consumed or used to produce more wealth, would be quite unchanged. Which is what will happen in socialism where the commonly owned means and instruments of production will be used to directly satisfy people’s needs rather than as today to yield a profit.

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