"The Matter of Fictitious Capital"
University of Illinois at Chicago
1. Along with zombie banks and toxic assets, it is apparently so much fallout of the present global financial crisis that we are all materialists now. In the advertising campaigns for Detroit automakers ("this was once a country where people made things") and in the liberal left political discourse of Naomi Klein, Joseph Stiglitz, and others (finance is "entirely divorced from the real economy"), a hard line inscribes itself between "things" and finance, Jeep Grand Cherokee and Credit Default Swaps.  This would seem to be a materialist line—a line contouring the real and cordoning the unreal, severing the sensuous from the imaginative, the raw material from the cooked ideal. And who better than Karl Marx could serve as the foremost referee of that line? He apparently judges "the material" to be "the means of subsistence" in human society ('land, bread, housing' and labor), and rules everything else out of bounds. 
2. Unsurprisingly, in our present crisis it is to Marx's writings on "fictitious capital" that political economists, cultural theorists, and even the mainstream media have frequently turned when they desire to contrast "the material basis" of value (as David Harvey puts it) and mere "claims or titles" of value (95).  From the Latin fingere: to form or feign, "fictitious" in "fictitious capital" indexes the putative opposite of Harvey's "material basis": immaterial superstructural representation. For the materialism that founds this particular critique of finance, industrial bodies that matter clash with financial figures that don't, and we'd all be better off if we could just banish those pesky representations.
3. Whatever the political benefits of such a "strategic materialism" (and I don't dispute that there are some), my modest proposal here is that it ought not be attributed to Marx. Precisely in the theory of fictitious capital, I argue, the Marxian oeuvre problematizes any materialism that would exclude representation from the material realm. In seeking to account for capitalism, but also (one wagers) in materialisms beyond that accounting, Marx repeatedly grapples with representation that materializes itself. His discussion of fictitious capital pivots on this uncanny mediation, recapitulating a problematic which repeatedly recurs across his writing—in interpreting finance, fetishism, valorized exchange, labor, and even the natural world: a strange materiality whose existence is unaccountable in terms of previously available matter, a material that dynamically mediates itself into existence.
4. In Romanticist circles, this mediation is likely more recognizable under the sign of "positing power" or "force." As those signs direct, one could arrive at this modest proposal by reading Marx with Paul de Man and/or Jacques Derrida—and indeed, crucial arguments by Jennifer Bajorek, J. Hillis Miller, and Werner Hamacher have formidably educed the resonances between Marx's materialism and a materialism of language.  The route I take in this essay is a more mundanely materialist one: reading Marx's texts alongside the archive of Victorian financial journalism he extensively drew upon. In that archive, which chronicled the financial revolution's rapid legalization of the institutions and instruments of finance such as the corporate person and derivatives, financial reporters continually formulated the enigmatic materiality of finance and queried the metaphysics of "fictitious capital." Citing this journalism at length, Marx's discourse attempts to educe the systematic consequences of this phenomenon.
5. By the time Marx settled in London in 1848, the Victorians had endured the first two in what would become a chain of constantly recurring large-scale financial crises, in 1837, 1839, 1847, 1857, 1866, 1873, and 1878. In every mainstream publication—from The Morning Chronicle (the most prominent daily) to Charles Dickens's Household Words to The Economist—these crises were explicitly attributed to the strange matter of fictitious capital.  For years, these publications were Marx's daily bread, littering his desk at the British Library, to which he had applied for membership immediately upon settling in London, and where his very first order of business was to read all the extant back issues of The Economist.
6. In the passages of Capital Volume 3 that are, even in their obscurity, more familiar to us than this Victorian discourse, Marx denominates fictitious capital as "interest," "claims" to future interest, "the mother of all insane forms" (when "a debt, for example, appears in the mind of a banker as a commodity"—read here "mortgage backed securities"), "self-propelling value," the "majority […] component of banker's capital" and, above all, an "illusion […] purely illusory" (Capital vol. 3, ch. 29). An illusion with many material modes of appearance, fictitious capital in the Victorian press meant above all else a representation of wealth that could itself beget wealth, a simulation that could, in their idiom, "realize capital."  As critical expository pieces in that era's press were keen to uncover, a crucial peculiarity of the London Stock Exchange created the conditions for this precipitation of value by feint. After the corporation was legalized in 1825, all Victorian corporations conducted IPOs before they commenced operations, utilizing the public stock market as their venture capital forum.  If an entrepreneur wanted to launch a business, he would assemble a corporate board and offer shares in the business on the prospect that eventually the business would indeed operate/construct/manufacture, etc. These shares would be sold to the public, who would not pay in cash, but rather in the form of a promise—a "subscription" whose bill would come due only on a bimonthly "Accounting Day." If, by the time of the Accounting Day, the price of the company's share had risen—either due to hype about subscriptions or to the availability of new information—an investor could "realize" a profit by immediately turning over his shares without settling for his subscription.  This act of "realizing" would be the only moment in the process at which money changed hands, the reality of the profit obtaining in a different register than shareholder dividends, since the companies did not exist, and different too from exploitation, since no labor had been performed. "Fictitious capital" thus signifies the differential reality of promises (the prospectus, the subscription) that profit (creating a new state of affairs, the actual money), speech acts whose eccentric felicity we could deem "material events." 
7. In light of this attention to performativity, it should not be surprising that the Victorian financial discourse broadly audited financial tropes, frequently synonymizing fictitious capital and "the poetry of banking."  After all, periodicals that went so far as to quote Plato in their definition of fictitious capital as "a matter of figures representing as existing that which has no real existence," could not long dally without some harsh words for poetry ("Banking Morality" 595, 597, passim). I won't myself dally on these recurrent references to chains of figuration in which stock certificates function as "the representative of a representative of a representative," but let us simply quote one:
8. Even more fundamentally—logically prior to the valorization of labor by money—labor itself, Marx's formulations suggest, is already bound up with this same foreign representation. The restricted sense of poiesis is not the exception, but rather the archetype of the general sense; making out of illusion is the condition of all human making:
9. This dynamism of natural making also underlies Marx's thought about the raw material of nature. In his letters to Engels for almost a decade, which prompted Engels's composition of the Anti-Duhring, Marx conceived nature as perhaps the foundational instance of strange matter, theorizing the "leap" by which "a transition is made from the realm of non-sensation to the realm of sensation" when nature materializes itself, and regularly using the term "naturwuchsig" (nature-grown / nature-made) to classify spontaneous making accountable neither as effect of labor nor as a sum of natural causes. 
10. If you have followed the silkworm's thread down this rabbit hole in which even the most immediate referent for "material" is itself riven by speculative enigmas, we can return again to the question of whether banking is the only poetic phase of capital—that is, whether there is a distinctive historical moment of fictitious capital from which we might find it politically desirable to regress. When Marx first introduces fictitious capital in his writings, he does so by quoting a report to Parliament in which officials warn of the "dangerous expansion" of an "enormous superstructure" (Marx inserts an exclamation mark here) of credit atop a "base" of the Bank of England's monetary reserve, finding that the gross economic output was not only one in which credit exchanges had vastly exceeded cash transactions, but one in which the volume of credit transactions undertaken to settle other credit transactions amounted to a situation in which "it is impossible to decide what arises out of real, bona fide transactions, or what part is fictitious" (Leatham 44).  "Fictitious" thus from the beginning bespeaks not the opposite of the real, but its indistinguishable twin. Indeed, Marx's chapter on "Credit and Fictitious Capital" stresses the additive rather than adversative function of the copula "and"—he assembles a series of quotes from the financial press and from economic history texts that, in their very definitions of ostensibly more legitimate, more collateralized forms of credit, render credit as such indistinguishable from fictitious credit. In economic discourse itself, his assemblage punctuates, it is impossible to decide on the line between real and fictitious capital.
11. For Marx, this impossible indeterminacy indicates precisely that something within all capital is fictitious, that capitalist exchange is ontologically unstable, logically ungrounded. From the opening pages of Capital, it is clear that speculation occurs long before the advent of the stock market and futures contracts: it takes place as soon as any exchange of goods is mediated by the abstraction "value." Value hypostasizes the commensurability of two qualitatively different goods, in two different spatio-temporal situations—a commensurability that Marx underscores is "in reality impossible" (in Wahrheit unmöglich) (Capital vol. 1, 151). The idea of value overcomes this impossibility by providing a "makeshift" (Notbehelf) an image that Marx designates "foreign to the true nature of things" (etwas der wahren Natur der Dinge Fremdes). In overcoming impossibility and mediating "true nature," valorization surges into actuality, wreaking foreignness in its wake. Not just finance, but every act of valorized exchange entails this lurching effectivity—this precipitous makeshifting from material to immaterial and back again—which Marx repeatedly designates with verbs of "jerking," "hurling," "flinging," and "throwing"—going so far as to define the drive momentum of capital accumulation as a "glitching circuit" (fehlerhaften Kreislauf) (Capital 873). He also likes the noun "leap"—when money comes to stand for value and becomes the third party in exchange, commodities make a "mortal leap" (salto mortale) into the body of money; when the argument in Capital reaches insurmountable paradoxes it makes a leap to start anew (Hic Rhodus, hic salta!), and also when nature materializes itself, as in the passage from the Anti-Duhring (Capital 200, 260).  A consistent Marxian motif (which Kiarina Kordela argues to be understood as Spinozan "immanent causality") is this notion of that which does not exist but in its effects defines every moment of capital, from mediated value to hedged futures (Surplus). Thus Marx's strongest assertion about fictitious capital formalizes the phenomenon he has been tracing all along: "fictitious capital is...purely illusory, yet it has its own laws of motion for all that" (seine eigne Bewegung) (vol. 3, ch. 29, 596).
12. As he repeatedly limns the strange material events of self-positing performativity, Marx broaches the insight that all capital is galvanized by the leap which fictitious capital perfects, prompting his denomination of fictitious capital "the most complete fetish" in its consummation of the fetishism of commodities and the fetishism of the "makeshift" (Theories 453). Fictitious capital comprises not only naked short sales and collateralized debt obligations, but stock, credit, money, and value itself. For this reason, we must rigorously refrain from romanticizing the non-fictitious "reality" of earlier capitalism when talking about finance: although empirically speaking, the world of the past did not fully concretize the universal structure of capital, structurally speaking, this fictitious virtuosity has always been with us.  The materialism we could name Marxian is thus not the tired arrest of speculative velocity by kissing the ground, embracing a substance—for that would be materialism made ideal. It is rather a "materialism without matter"—what Marx called the "ruthless criticism of everything existing": the relentless analysis of the material events by which capital posits its own preconditions while poetry makes the world, and of the mediations that might one day unbind the two. 
"Alarming State of Trade." The Charter 10 Nov. 1839. Issue 42. Print.
Alborn, Timothy L. Conceiving Companies: Joint Stock Politics in Victorian England. London: Routledge, 1998. Print.
Austin, J. L. How to Do Things with Words: Second Edition. Ed. J. O. Urmson and Marina Sbisà. Cambridge, MA: Harvard UP, 1975. Print.
Bajorek, Jennifer. Counterfeit Capital: Poetic Labor and Revolutionary Irony. Palo Alto: Stanford UP, 2008. Print.
"Banking." Household Words 17 May 1856: 428-429. Print.
"Banking Morality." The London Review 29 April 1865: 445-447. Print.
"Banking and Poesy." The City Jackdaw 21 Sept. 1877. Print.
Cohen, Tom, and Barbara Cohen. Material Events: Paul de Man and the Afterlife of Theory. Minneapolis: U of Minnesota P, 2000. Print.
Derrida, Jacques, Terry Eagleton, Frederic Jameson, and Antonio Negri. Ghostly Demarcations: A Symposium on Jacques Derrida's Specters of Marx. Ed. Michael Sprinker. New York: Verso, 2008. Print.
Dickens, Charles. "Lessons in Bankruptcy." Household Words (13 Feb. 1853): 210. Print.
Evans, David Morier. The Commercial Crisis of 1847-48. London: Letts, Son and Steer, 1848. Print.
Francis, John. Chronicles and Characters of the Stock Exchange. London: Willoughby and Co, 1849. Print.
Hamacher, Werner. "Lingua Amissa: The Messianism of Commodity-Language and Derrida's Specters of Marx." Ghostly Demarcations. A Symposium on Jacques Derrida's Specters of Marx. Ed. Michael Sprinker. Trans. Kelly Barry. London; New York: Verso, 1999. 168-212. Print.
Harvey, David. The Limits to Capital. Updated ed. New York: Verso, 2007. Print.
Karatani, Kojin. Architecture as Metaphor: Language, Number, Money. Ed. Michael Speaks. Trans. Sabu Kohso. Cambridge, MA: The MIT Press, 1995. Print.
Klein, Naomi. "Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism." Democracy Now! (22 Aug. 2012). Web.
Kordela, A. Kiarina. "Marx's Update of Cultural Theory." Cultural Critique 65 (2007). Print.
---. Surplus: Spinoza, Lacan. Albany: State U of New York P, 2007. Print.
Leatham, William. Letters on the Currency. London: Pelham Richardson, 1840. Print.
Marx, Karl. Capital: Volume 1: A Critique of Political Economy. Trans. Ben Fowkes. New York: Penguin, 1992. Print.
---. The German Ideology. New York: International Publishers, 1970. Print.
---. Grundrisse: Foundations of the Critique of Political Economy. Trans. Martin Nicolaus. New York: Penguin, 1993. Print.
---. Theories of Surplus Value: Volumes One-Three. Amherst, NY: Prometheus Books, 2000. Print.
Miller, J. Hillis. "Promises, Promises: Speech Act Theory, Literary Theory, and Politco-Economic Theory in Marx and De Man." New Literary History 33.1 (2002): 1–20. Print.
"Money Market, City, Friday." The Morning Chronicle 1 June, 1833. Issue 19895. Print.
"Money Market and City Intelligence." The Era 15 Dec. 1844. Issue 325. Print.
"National Debt." The Morning Chronicle Wednesday January 31, 1816. Issue 14585. Print.
Plato. Symposium. Trans. Robin Waterfield. Oxford: Oxford UP, 2009. Print.
"The Poetry of Banking." The Banker's Magazine Vol.1 (June 1844): 151. Print.
"Poetry of Stock-Jobbing." Blackwoods (December 1849): 669. Print.
Robles, Mario Ortiz. The Novel as Event. Ann Arbor: U of Michigan P, 2010. Print.
Shelley, Percy Bysshe. The Poetical Works of Percy Bysshe Shelley ... To Which Are Added His Essays and Fragments. A New Edition. Ed. M. W. Shelley. London: The British Library, 2010. Print.
Stiglitz, Joseph E. "The Book of Jobs." Vanity Fair (5 Jan. 2012). Web.
"The Stock Exchange." Chambers Journal (10 June 1865): 366-368. Print.
 Karl Marx, "First Premises of Materialist Method," The German Ideology (42).
 Harvey frequently defines "fictitious capital" in contrast to the "material," as in "money that is thrown into circulation as capital without any material basis in commodities or productive activity" (95). Marx's discussion of fictitious capital in Volume 3, Chapters 25 and 29 makes no such distinction, focusing instead on the specificity of the "titular" quality of the "claims to value" made by financial instruments, in connection with the claims to value made by the process of commodity exchange. BACK
 According to Dr. Johnson's dictionary, when "realize" first came into financial usage in the eighteenth century, it meant "to convert money into land." The Victorian usage, by contrast, connotes the conversion of land into money, the conversion of assets, whether "real" estate or virtual futures, into the realer real of capital. BACK
 See "The Poetry of Banking," "Banking and Poesy," "National Debt," "Money Market and City Intelligence," and "Poetry of stock-jobbing." In "Lessons in Bankruptcy" Dickens connects fictitious capital and technologies of writing: "raise a fictitious capital at the commencement of your business by the stroke of a pen." BACK
 Notebook 1, October 1857, The Chapter on Money, Part 2.
 This contrast between empirical and structural is a variation on that between phenomenological and transcendental that Kordela makes apropos capital's virtuality. "Marx's Update of Cultural Theory," 45 BACK