Money capital that is not applied to production (of surplus value) but is reproduced parasitically in the form of a bet on the results of productive capital, a bet that will only give a positive overall result as long as the flow of fictitious capital towards speculative markets keeps growing.
The first fictitious capital
In rising capitalism fictitious capital already appears as an outlet for the surplus capital that regularly fails to find direct productive application. It is the first speculative capital: the one that "takes refuge" in public debt and on the Stock Exchange -speculating on the value of companies without any real increase in the capital with which they operate. It is separated from the real production of surplus value, being in reality nothing other than money capital wagered on the capacity of the state to collect a part of the surplus value produced (public debt) or on the rise of future expectations about a company (stock market speculation).
[This] fictitious money capital is enormously reduced in crises, and with it the ability of its owners to obtain money for it on the market. However, the fall in the nominal price of these securities on the stock lists has nothing to do with the real capital they represent, but a great deal to do with the solvency of their owners.
Karl Marx. Capital. Section V. Chapter 30. Money capital and real capital.
Fictitious capital already then proves tremendously fragile in the face of crises, since in order to reproduce itself with good results it depends on the growing arrival of new fictitious capital on the market, but that growth occurs as a symptom that accumulation has exceeded the limits within which it can be reinvested in the direct exploitation of labor. In other words, the more it grows and prospers, the weaker its foundations and the less likely the overall bet on which it is staked. That is why the great collapses of speculative markets are always abrupt and follow long periods of self-accelerating growth, the famous "bubbles".
The development of fictitious capital in capitalist decadence
What in rising capitalism is an important, though relatively marginal, phenomenon, showing the permanent tendency of capital towards over-accumulation that accelerates in the moments preceding the spasms in which the world market grows, with the entry into decadence becomes a central element of the financial system and the tool through which the "war capitalism" of the period 1914-18 turned into today's state capitalism.
The normal development of the industrial cycle was interrupted by the war, which became the most powerful economic factor. The war created for the basic sectors of industry an almost unlimited market, completely sheltered from all competition. The great buyer was never satisfied with what he was supplied.
The manufacture of means of production was transformed into the manufacture of means of destruction. Articles of personal consumption were bought at ever higher prices by millions of individuals who produced nothing, who did nothing but destroy. This was the very process of destruction. But, by virtue of the monstrous contradictions of capitalist society, this ruin took the form of enrichment. The State floated loan after loan, issue after issue, and budgets that used to be reckoned in millions came to be reckoned in billions.
Machines and buildings wore out and were not replaced. The land was poorly cultivated. Essential construction in the cities and on the railways came to a standstill. At the same time, the number of state securities, of credit and Treasury bonds and of funds increased incessantly. Fictitious capital grew to the same extent that productive capital was destroyed. The credit system, a means of circulation of commodities, was transformed into a means of mobilizing national wealth, including that which future generations will have to create.
For fear of a crisis that would have been catastrophic, the capitalist State acted after the war in the same way as during it: new issues, new loans, regulation of the purchase and sale prices of the most important articles, guaranteed profits, products at reduced prices, multiple allowances added to salaries and wages... and, with all this, military censorship and the dictatorship of the gold braid.
Theses on the world situation and the tasks of the CI. Third Congress of the Communist International, June 1921.
After each imperialist world war, fictitious capital will undergo an exponential increase in the form of speculative and futures markets. Once reconstruction is over, capital finds it ever harder to find where to sell all its production and therefore where to invest what it has accumulated in new profitable applications. If there is hardly a market any more for everything it produces, how can there be one for producing exponentially more?
A part of capital gives up looking for productive applications and places itself as a bet on the results of already existing productive businesses, on the future demand for certain goods, on the payment of debt packages, etc. A gigantic mass of fictitious capital thus appears, separated from the real exploitation of labor and therefore with feet of clay, which exceeds productive capital several times over and is the trigger and the cause of the sudden and cataclysmic character of financial crises.