Functional socialism

CAPITAL pla

industrial or communal credit and without calling for one penny of capital.

ARTIFICIAL CAPITAL

The wide abyss between existing nominal capital and the functional value of our assets grows ever wider and deeper and is the logical development of finance-capital. I am perhaps alone in my opinion that this is less the child of the great industry than of the joint stock acts. But whether post hoc or propier hoc matters little; the fact remains that our visible assets are not commensurate with the present sum total of capital stated in terms of money. It is not that our assets have shrunk; capital has expanded on the shifting foundation of earning capacity. We are all familiar with the process. A business upon which £5,000 has been spent—building, machinery, and, perhaps, even goodwill—becomes a great success, earning, say, 100 per cent. When the money market is ripe, the capital expands to £50,000, the value of the assets remaining constant. The most striking instance of this, in recent years, would probably be the torrential watering of cotton capital under the direction of the late James White. He was reputed to be a millionaire; he committed suicide rather than face his creditors. As for capital values in the textile trade, where are they now? Function, of course, cannot recognize any claim for capital in excess of functional or use values.

Unless we grasp the meaning of this refusal to recognize artificial capital values, we shall be caught