Marx spoke about Fictitious Capital in Volume 3 Chapter 25 of Capital which he had never published in his lifetime. He never had a chance to review this work or submit it for review with other economists or sociologists.

Marx’s alliance with anarchism may have influenced his theory on finance capital, namely stocks.  This alliance cost the revolution repeated losses.  The First International never produced any heads of state, unlike the Second and Third Internationals.  This may have had to do with the irresponsibility and great danger posed by the compromise with anarchism.

The stock market, rather than just a purchase of paper claims, represents a purchase of actual capital by the company, that is a conversion of Money to Commodity.  In the moment, it appears as if only a paper claim on assets and profits has been sold, no actual productive machinary.  Yet this secondary market of stocks only replaces the issuing company with a third party in this variation of the transaction. 

The sale of a used chair from a chair owner to a buyer does not provide any money directly to the chair manufacturer.  Yet this sale affects the price of chairs in general, which determines the price that manufacturers can charge.  One doesn’t need to buy chairs directly from the manufacturer in order to sit in them.  The use-value of the chair maintains itself within the secondary market.

This same process occurs within stocks.  This time, rather than use a chair, the owner uses the stock.  They enjoy the same ownership as someone who paid the company directly for their stock.  The price at which they bought the stock will also determine the price at which the company can issue stock to raise new capital. 

Part of the joy of ownership, then, or the use-value of the stock commodity, would be to determine, at least as part of a wider community, the relative value of the company’s investment as compared to others.  When a stock holder decides to sell his $10 stock when it reaches $20, he has decided that, for instance chair manufacturers should receive more money-capital in exchange for a share of their company.  If table companies sell for $20 currently, he may plan to buy table-company stock at $10 a share, believing that table companies and their operations are over-rated, while chair manufacturing should expand.

The capital that enters into the chair company when it issues stock at $20 a share will go into physical capital.  The company may safely issue at $20 because all the stockholders decided not to sell their stock until it reached $20.  The table manufacturer cannot find enough buyers for its stock unless it lowers its price to $10.

This tells us that $20 spent on increasing chair manufacturing equals $10 spent on table manufacturing.  Or to state it differently, to increase the less popular table manufacturing twice costs the same as increasing chair manufacturing once.  Yet they will produce approximately the same profit.  Should not society, then, choose the easier job of one increase in production to satisfy demand rather than two? Better to produce the more popular chairs than the tables which will not sell as well.  This will also allow the chair manufacturer to issue stock at a higher price and raise more capital for society’s chosen purpose.

The importance of this argument will arise in the battle between the revolutionary state and the alliance of infantile left-revolutionaries attached to reformers of the old order and anarchists who seek to destroy the foundations of the new state.  This natural alliance will threaten the existence of any new order.

The attitude towards Fictitious Capital, which may exist as a result of fraud and other crimes, must not turn into a wholesale burning of the financial records.  The reformers would turn to reaction under such a case, to restore the old order, perhaps with certain promises of reforms won through secret negotiations with the old government, as the more responsible decision.  The anarchists would use such collective amnesia to transfer property away from the workers and their states and economic programs organized nationally and internationally and towards anarchist collectives dominated by the middle class without the guarantee of common ownership for all the workers.

The best policy for workers would not include the confiscation without compensation of stocks.  They would include compensation for small-scale shareholders and compensation for all shareholders up to a $20 million universal wealth cap.  This could include a certain limited grace period in which they could redistribute the wealth themselves among their families and associates.  This could increase social harmony, build a strong foundation for a revolutionary society, and bring control of these companies over to socialism.

Regardless of the efficacy of the markets to create mechanisms to manage the wealth of society, the key factor which necessitates socialism remains.  The class divide between workers and capitalists forces workers into conflict with the economic and political system.  Only their ascendancy into power as a class throughout the world will end this conflict. 

The capitalist system forms intricate systems to maintain its balance, but in the end, and with increasing frequency and force, the system collapses into a destructive free for all as competing interests cannot realize their objectives without destruction of competitors.  The revolution will save the best of capitalist society, including its financial records, in order to guarantee the distribution of goods to the people.  Without these financial records, any new currency will be subject to hyper-inflation, as the Bolsheviks experienced, and any economic project could face unexplained shortages or unforeseen management conflicts.  The protection of financial records will provide economic stability, the foundation of justice and freedom, to the new revolutionary order.