But, as I set out nearly 20 years ago, in relation to the collapse of Northern Rock in Britain, in the run-up to the global financial crash, what if they did, sell their shares and bonds? The concern with the level of share and bond prices, is itself a reflection of the fact that since the 1980's, the whole politico-economic model has been built around the delusion of fictitious capital. Watch any of the business programmes, and they are obsessed with the movement of financial markets, of the prices of shares and bonds. The valuation of companies is not measured in the physical capital, which is what they require to produce goods and services, not to mention profits, but by the current value of the issued shares.
But, shares are only issued after the company has been already loaned money. They are little more than a receipt for the payment of that money, a debt certificate. The money already handed out to the company, has been used to buy real capital, and it is that real, physical capital that is significant. It is that capital, the buildings, machines, materials and labour-power that comprise its elements that produces new real wealth in the form of goods and services, and along with it produces the new value of those goods and services. So, as I pointed out in relation to Northern Rock, so what if the existing shareholders decide to sell their shares?
The consequence is that the price of those shares falls. But, that does not affect the value of the real capital of the company, or its ability to function as capital. As Marx points out, in the past, crashes in asset/share prices have often gone along with conditions that benefit a rise in real capital accumulation. If shareholders, faced with increased tax, in the form of a wealth tax, or dividend tax, or capital gains tax, decide to sell their shares and buy shares in some other country, so long as the workers in those companies continue to be able to operate the real capital, for them nothing significant has changed. So, when, at the time of Northern Rock and so on, governments claimed that they needed to bail-out those companies, to buy up their shares and so on, nothing of the kind was necessary, all they needed to do was to rubber stamp the right of the workers in those companies to turn up to work as they did previously. So long as the company is itself profitable, there is no reason not to continue to do so.
But, of course, governments were not going, and are not going to give workers that right, because to do so would mean that workers would demand the same right in every company – a right, incidentally, which they should already have as the collective owners of those companies. The real answer to shareholders threatening to sell their shares, bonds and so on, is to remove the unjustified rights that the shareholders, currently, exercise.
There is no reason why, as shareholders, they should exercise control over companies, and, yet that control enables them to asset strip companies, or to decide to just close them down entirely. Remove that right, and hand it to workers, and the power of those shareholders is undermined immediately. Yes, its true that, when firms, then, seek to borrow money via the issue of shares, they will face resistance from potential shareholders, manifest in much lower share prices, and so higher dividend yields, but for existing companies, the large majority of their needs for additional money-capital can be met from their own realised profits. Moreover, banks insurance companies and so on, are, also, the collective property of workers, and so all of the pools of savings contained in them can be mobilised to meet those additional funding needs.
The real obstacle, here, is not the ability to finance this additional capital accumulation, but the fact that the response of the ruling class to such measures would go way beyond these types of actions, of capital strikes, attacks on the currency and so on. It would assume the form of the kinds of action seen in Chile in 1973. It would go to the measures of economically blockading any country that sought to go down that path, as, for example, has happened with Cuba. To resist all of that, it is necessary to go beyond the measures even of progressive social-democracy, and to move to the establishment of a workers' state, and to establish such a state on an extensive basis, for example, across the EU.
That is the struggle that lies ahead of us.
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