 Welcome to the Development Studies seminar. We're very lucky to have Cedric Durand here today to talk about fictitious capital in the 21st century, and he's going to draw on his book, which came out from Verso in 2017. I'll just introduce Cedric and then Caroline, who will be our discussant, and then we will, as usual, open it out to the floor for questions. So Cedric is an economist and associate professor at Paris 13 University. He teaches development theories at the School of Social Sciences and is on the scientific board of the MSH Paris Nord. Working within the tradition of Marxist and French regulationist political economy, he studies globalisation, financialisation and contemporary mutations of capitalism. And he's also on the editorial boards of the Review d'Economy Industrielle and on the journal, the online journal Controtant. And just to also introduce Caroline. Caroline Alves is a research fellow at the University of Cambridge, who specialises in macroeconomics and international political economy with an emphasis on the perspective of global changes in politics, economics and governance. So we'll first hear from Cedric and then Caroline, and then over to you. Good afternoon everybody. Thank you very much Faisie for this invitation. I'm very happy to be here and to talk to you about fictitious capital in the 21st century. So I will draw on the book and make some additional comments more related to the current situation, as you will see. So of course, if there is a need of clarification, something is too technical and so on, just do not hesitate. Made a short point, a question I will do my best to clarify. So I just want to begin with an anecdote that was in Paris a few months ago, two months ago. We had a Jamie Dimon. Jamie Dimon is the CEO of GP Morgan, and GP Morgan is the most successful Wall Street Bank nowadays. And he came in the 93, the suburb of Paris, and he came in this region with the idea of bringing some money to support the most deprived population of the Paris surroundings. And so he came, he met with Macron afterwards and so on. And the donation that he made in the name of GP Morgan was 13 millions of US dollars. So 13 millions of US dollars is very interesting because it's almost nothing in comparison with GP Morgan profits. In fact, that's exactly the money that himself received as a wage the previous year. So that's really a small amount of money. But that was symptomatic of something that ten years after the great financial crisis, the bankers are back on the front, on the political front. And they are bringing back their own position in order to say that they can help the world, they can help to make the world better and so on. So in this sense, that was something symptomatic. Of course, this resilience of financialisation, that's not the case of bankers coming back to make a philanthropy. That's something that is also clear in the data. If you look at stock market capitalisation, so that's one of the indicators of financialisation, there are many indicators of that. But you can look that you had the dotcom crisis in 2001, then a fall, then you have a new wave of financial expansion, then the 2008 crisis. And right now, stock market capitalisation vis-à-vis GDP is higher than it has never been in history. So finance has completely recuperated from this point of view since in the course of the past decade. You also have other symptoms of this persistence of financialisation. And one of these symptoms is a new wave of emerging market financial crisis. And I think that many of you are interested in this topic. We have seen last year two important crises in Argentina and in the Turkey crisis. Exactly the same kind of financial crisis that we had two decades ago, with a lot of hot money coming in from the north and going out very rapidly and letting a population in despair in the meantime. Finally, another symptom of this resonance of financialisation is the persistence of a pro-finance agenda. So here I have two quotes. One is from Phil Angelides that was the chairman of the Financial Crisis Inquiry Commission in the US Congress. And what he is saying is that right now there is a new wave of financial deregulation. And in fact, Trump is pushing an agenda of financial deregulation, a rollback against the small safeguards that were put in place in the aftermath of the crisis. But in Europe too, the same kind of phenomenon is going on. The implementation of the capital market union is basically oriented toward more enlargement of the single market based of capital markets. The key point for the European Commission is to improve financial condition by enlarging the possibilities of securitisation of loans. So we have a persistence of a pro-finance agenda and that's the first symptom of this financialisation. So what I want to take today is to try to make sense of financialisation. That's the topic of the book and I will try to give some insight today about that. What do I have in mind when I said that I want to make sense of financialisation? I think there is two main issues. The first issue is to try to understand the roots of crisis tendency that are linked to this development of finance. And the second issue that we need to discuss is the socio-political content of financialisation. So on the first topic, I think that there is a problem in the literature about financialisation. The problem is that we lack a proper socio-political articulation of the link between financial accumulation and real accumulation. And just to give a few examples, for example in France we have Andréo Léon who is an excellent socialisation of money. However, he is not able to, to my view, to correctly articulate the relationship between speculation on the one hand and the fundamental value on the other hand. We have another strand of literature with a lot of macro-economic scholars, post-kinagian scholars in particular that put the emphasis on financialisation understood as shoulder value orientation and the lack of investment of financial corporation. So I think that's very interesting and very important topic. However, in this perspective you do not have a proper understanding of what finance is. And finally, you have a Marxist or sociologist literature that put the emphasis on, with the Swissie, ArriG and on the sociologist side, Kripner, that consider that there is a term toward finance of accumulation, accumulation through financial profits. However, this literature do not explain how it can be sustained and I think that we need to understand that. So that's the first kind of problem that I want to deal with. So crisis tendency and the articulation between real accumulation and financial accumulation. The second issue that I would like to deal with is the socio-political content of finance. In fact, in the aftermath of the financial crisis, there has been a huge, tremendous intervention of political actors, of the states of central banks in order to rescue finance. However, we need to understand precisely what is at stake in terms of socio-political content with these policies. We need to conceptualise that. So I will, in particular, that's important to understand the current conjunctures. I'm just coming from Paris and you know in Paris the atmosphere is quite interesting in the past few days. We had something that I really, I was thinking when discussing with my anarchist friend that I will never see again barricade in Paris. That sounds really old school for me. Oh, something marginal maybe one day. But here during several Saturdays, we had barricades every Saturday during hours in the very core of Paris. And that's the kind of legacy of the policies implemented in the post-financial crisis period. So, the structure of my book of my talk will be the following one. First, I will discuss the idea of financial instability. Here I will draw on one of the most relevant theoreticians for this issue, from my point of view, and this is Aiman Minsky. So I will try to explain what Aiman Minsky says and show that it is very relevant to our topic. However, and that will be my second point, something is missing in Minsky and what is missing is the idea of fictitious capital, the concept of finance in itself. Not the instability of finance but the concept of finance in itself. And I will draw on the concept of fictitious capital by Marx. And then I will try to make clear how financial capital, fictitious capital is sustained. And then we will move more to empirical questions, two questions, financialization. So the period of financialization since the 80s, and I will try to suggest a two-time periodization of financialization. And then I will go back to the power of finance in general and in concrete in this conventure. OK, so the logic of financial instability. This presentation is very basic but I think very strong. What Aiman Minsky says that you have always the same simple dynamic of instability in finance. At the beginning of one cycle there is confidence, there is good assets, so good security that are circulating and finance is robust. So you are taking some credits but you are able to pay back your credits and you are able to pay back your interest. Then you move to speculation, then you are just able to pay back your interest and then you move to Ponzi finance. And at this moment everybody is taking debt and using debt to pay its interest and to pay back the principle of the debt. At some point you have a crash, you have a crisis. And this is occurring again and again and again for centuries. However, Minsky is making things a little bit more complicated. What he explained is that the state is stepping in in order to limit the problems resulting from this financial instability. But in doing that, the state is making financial instability bigger. So try to figure out what is in this figure. You have a small crisis, then the state is stepping in and managing the crisis. At that moment you have a new phase of optimism. People are confident in this situation and you have a new financial innovation. At that moment you have a new crisis but this time it will be a bigger crisis because you have more things at stake. And then you have improved management again and so on and so on and so on. So you have this min scan financial super cycle. So you see you have good quality of securities at the beginning, small crisis, the state stepping, new phase of financial expansion, bigger intervention of the state and so on. And in fact that's pretty good in order to understand what is going on in our current time. If you look at what occurred in the US since the 90s, you observe that you have this intervention of the state exactly in reaction of two financial crisis. You have first the saving and loan crisis at the end of the 80s. Then you have a massive reduction in real short-term interest rate. So that's on the left side of the graph, real short-term interest rate. So the central bank diminished your interest rate in order to support the financial sector and lower the cost of debt. Then you have a phase of expansion in the 90s, a brief phase of expansion, then the dot-com crisis. And again you have a new intervention and this time you have also an important increase in public deficit. Then you have the crisis of 2008 and at this time you have an even bigger intervention at the level of interest rate and at the level of the public deficit too. So what you see here is that we have three, in this graph, we have three crises and each time in order to contain the crisis the state stepped in with even bigger interventions in terms of monetary policy and fiscal policy. So excellent, means key is excellent, it's very clear, it's very, what is explaining is very strong I think and it's illuminating in order to understand what is occurring, what will occur now. We had a financial occupation but everybody is feeling, is understanding that financial instability is not going away for a long time. So what we need to have in mind is how will be built with the next crisis and what are the room of maneuver for the next crisis. That's a big question and I think that means can explanation is putting this problem very clearly. However, what is lacking in means key from my point of view is a proper understanding of what's going on with finance, what's the concept of finance. And in order to understand that concept more clearly I think that we need to use this concept of future capital in order to clarify what financial value is about. So a small genealogy, here in England at the beginning of the 19th century, even in the late 18th century you have the first occurrence of the term of future capital and basically the idea is the following one. There is an enlarged circulation of paper money and this circulation of paper money is seen as a factor of crisis. Why? Because it will favour speculation and in the meantime it will lead to important disappointment for speculators but that's not all. It will spread to the whole banking and monetary system and it will corrupt the morals of the trading part of the community. So the idea at this moment is that paper money is linked to instability and instability to corruption of the monetary and banking system. So future capital is used as a way to criticise the concept of paper money. However, in the 19th century it will be more and more common to talk about future capital in a wider sense. And Hayek, of course Hayek is 20th century but is using this literature to forge his own concept of future capital. And what is saying Hayek is the following thing. When we think about over investment in fact it's not an excess of investment relative to demand for the ultimate product that is at stake but that we have too much investment in terms of too much new product. And I will try to make that clear with this graph. According to Hayek you have a clear immediate correspondence between financial balances and real balances. So according to Hayek if you have an increase in credits and you have the same level of consumption you will have a real imbalance. What is a real imbalance is that there will be a launch of new productive projects but the same level of consumption. So some resources will not be here. There will be a lack of resources in order to implement these new projects. And this is a very key factor explaining the crisis. The crisis results from a lack of resources to the functioning of the new facilities, the new projects that were launched. Then you need an adjustment or diminishing consumption or an abandonment of production facilities. So I see it once again in order to make that very clear. According to Hayek the real world and the financial world are one of the same. So for one economy if you have more credit then you have more investment you will have some trouble because there is not enough resources for that. So you will have to reduce consumption or to abandon some productive projects. Financial imbalances led to real imbalances then crisis. Mark is much more sophisticated than Hayek, much smarter. In fact what Mark is saying is that on the one hand there is a kind of elasticity of the real economy vis-à-vis the financial sector. And if you have an expansion of the credit system of course this expansion will not necessarily lead to crisis. It can help to accelerate the development of capitalism. And there is this quote, an increase in credit accelerates the material development of the productive forces and the creation of the world market. So basically new credit helps to launch new projects. In fact credit, ffictitious capital, credit out of nothing in the spirit of Mark's, help to overcome the limits of what is available to loans. What is the level of saving at one point in time. However, Mark is also understanding that at some point that could fill some crisis. You can have some resource constraints in extreme situations. So he said that where the credit system appears as a principal level of over production and excessive speculation in commerce. Because here it forces the reproduction process which is elastic by nature to its most extreme limit. So what does that mean? That's very clear. You can accelerate growth using ffictitious capital, that's fine. But at some point you cannot do that anymore because you don't have enough resources and then you have crisis. So in Mark's ffictitious capital is both something that helps to accelerate growth and something that can nurture some crisis. So that's this idea. You have a dual character of ffictitious capital. So I think that I won't go in the detail of this concept. But what is very interesting in Mark's is that he's operationalising the concept. So he looks at specific categories and basically he said that bank credit above savings, public debt, company bonds, shares. All of these elements are some source of ffictitious capital. If you think about that, the ffictitiousness is not exactly the same in the various cases. So in some cases that's ffictitious because there is no previous saving. In other cases that's ffictitious because that's an anticipation and future value. So there are various dimensions of ffictitiousness. But in all these dimensions you have some kind of ffictitiousness. So what is good is that we have not only a general concept ffictitious capital that we will clarify, but we also have some concrete occurrence of this ffictitious capital. So let's go back to our time. If you look in high economy since the 70s you observed a rise in the various forms of ffictitious capital. You had a rise of credit to the private and financial sector. So that's if you want an average of an average country that's the black line. So that's increasing all the time and stabilising after the crisis. You also have an important rise of credit to the government sector. Especially after the crisis, that's the cost of the crisis. That's the intervention of the state in order to save finance. So you have more public data after that. And you also have, we already know this graph, a recuperation of the stock market. But that comes after a very important rise in the 80s and the 90s. So if you want to understand the weight of ffictitious capital in our times, you need to compile these various categories. And then you have a very nice graph, a very smooth graph. You have a tranquil, slow increase in the weight of ffictitious capital in our economies. That was about 150% of GDP at the beginning of the 80s. And right now the weight of ffictitious capital is about 350% of GDP. So here you can see the empirical relevance of this category. So that's the compilation of these three dimensions. Private debt, non-financial private debt, public debt and stock market capitalisation. In fact, that's a very conservative evaluation of the empirical weight of ffictitious capital. Because you have debt within the financial sector. And you also have all sophisticated forms of ffictitious capital. Derivative products and so on. So I just give you one idea about that because we don't have the same kind of statistics. But we had in the 2000s, the past 20 years, a huge increase in the weight of OTC derivatives at the world scale, that's international data, and a stabilisation after the crisis at this very high level. Okay, let's sum up the concept. We have three elementary forms of ffictitious capital. Public debt, private debt, stock market capitalisation. These three categories have increased very importantly in the past three decades. They have, according to Marx, an ambivalent impact on accumulation. On the one hand, they help to accelerate accumulation and to overcome the limits of investment funding. And here there is a kind of Canadian twist in Marx. But in the meantime, they feel unsustainable from Tasmagoria. And here there is Ajak or Minsky, something that is not sustainable. And ffictitious capital have these two effects. However, and I will go back to that and I think that is very, very important, one of the key contribution to Marx, is to stress that ffictitious capital is an anticipation of future value. It's capitalising on future value. It's capitalising on future production. And you will see that this dimension of anticipation will be central to our concern about the weight of ffictitious capital nowadays. So, how ffictitious capital is sustained. So we have seen that there is more and more ffictitious capital, but there is an issue out of where that is coming. The first idea that we need to clarify is the status of financial value. The basic idea is the following one. There is an autonomy of finance, but this autonomy of finance valuation is only relative to real valuation. You are on financial market, completing conventions on the price of financial assets. There is a game of speculation, a game of mirror of financial subjectivities. Speculators are looking at each other's making bet and so on. However, there is a loose necessary relation in finance with the fundamental value. In fact, if you look at all the financial bubbles, they are always sustained by a real story. You must be able to convince the other people to step in your speculation and in your bubble. You must have a story to tell. You are, for example, in the 90s, the new economy of the internet economy. You have the platform economy and the tech nowadays. You have the story about housing, a penalty of houses in the US that was supposed to explain that there won't be a diminishing of the value of housing and so on. You have an autonomy of finance, but this autonomy is only relative. Speculation does necessarily refer to valorisation through social production, through the real sphere. Sorry, this slide is in French, but that's just to stress this idea. You have a process of real valorisation on the left, where we have work, you have production, you have conditions of consumption, you have conditions of competition, so that's the real sphere. Out of this sphere, you are able to fill some financial income that helps to sustain the financial valuation. Then you have a feedback loop through funding schemes. So you have this two-way relation between features-valorisation and real-valorisation, but you have a preeminence of real-valorisation. So my point is very simple here. You do not have value creation out of finance. Finance do not create value. So, in order to sustain ffittisu's capital, you need something. You need that financial incomes that were expected are coming. That's the very precise condition of non-crisis. If interest are not paid, if debt are not paid back, if dividends are not paid, then you have a financial crisis. However, whatever the means that's not important, if you have a continuity of financial payment, ffittisu's capital can be sustained. That's the core of the argument. But here you understand that there is a problem because financial profits, if ffittisu's valuation is not real in itself, financial profits are real. Financial profits are derived out of the real sector, but they are as real as industrial profits. So, you need to map this plurality of financial profits. In fact, that's quite complicated because you have a lot of kind of financial income that help to fill financial profits. Dividends, interest, capital gains, fees, financial fees and so on. And probably you know Costas Laparizas because he's teaching here. In this book, there is a very good mapping of these various kinds of financial profits. So, I won't go in the detail of this table, but this table, the idea of this table is very simple. You have a lot of kinds of origins of financial profits. However, the socio-political content of these various kinds of profits is not homogeneous. Think about interest on debt. If you are paying back your student debt, that's a kind of specific contradiction between you and the bank that is not the same as a contradiction between a transnational corporation that has taken out a loan from a bank in order to sustain its internationalisation investment abroad. In one case, there is a contradiction between you as a wage earner and your bank that will be kind of profit open alienation. And in another case, you will have a contradiction between the bank and the transnational. So you have a lot of, that's just an example, but for all these various kinds of income, you have specific further contradiction. But we can try to make sense of these varieties to simplify the picture. I propose this to try to expand these varieties. You have financial profits. This financial profit may occur out of three main sources. The one is the mainstream story. It's a small story, but that's the story of innovation. The financial sector is allocating sufficiently efficiently capital in the economy and then is draining some profit out of that, but that's in general beneficial. But that doesn't fit well with what we know of the financial sector that is right now more taking than it is giving to the real economy. So we need two other stories. The first story is the story of disposition. It's out of David R.A. accumulation by disposition. And the idea is the following one. The financial profit comes, are extracted out of the production sphere. And you have some kind of political profits. For example, when the taxes on corporations is diminishing, which is the case everywhere since the financial crisis, you have a diminishing of the real level of taxation of transnational corporations. This is filling financial profits through dividends. You also have some direct fees on the population. For example, the rise of student debt, the rise of financial fees through pensions funds, and so on. So that's disposition. And the second kind of origin of financial profit is what I propose to call after living parasitism, is the capture of ordinary industrial profits. Or some profits taken out of domestic firms. Or just on their own profits or through a more intensive exploitation of labour that is passing directly to the financial sector. But you also have an internationalisation that is very important. And you are in development studies, and I think that maybe this part should be interesting to you, is the link between globalisation and financialisation. This thing is very important, because we observed in the meantime when we had globalisation, we had this financialisation. And the connection is probably to be found in the organisation of global value chains. Global value chains is the way capital is organised at the world scale with small capitals and big capitals and unknown event distribution and profit within this chain. And most of these big capitals are located in the north, and so you have a kind of pump of value along these global value chains and to financial market in the north. Are you still with me? Okay, so I think that we have all the key elements in order to understand what is the biggest capital. It's on the one hand something that is filling in stability because of the internal dynamic of the financial system. But that's something that is linked to the real economy that is not disconnected to that, because at each moment in time it needs some financial income in order to fill and to sustain its valuation. So here you have two main ways. There are many dimensions of financialisation, so I will of course not cover all of them. I just want to dig into two directions. The first one is the relationship between non-financial corporation and shareholders' financial markets. That's financialisation and this literature on high profits, low investment in the neoliberal period. And then we will move more to the political side of the policies sustaining financialisation. So financialisation one and two. I don't know to what extent you are aware of this literature of financialisation, but you have a lot of fascinating works and that's still a very, very productive field. But you have some limits in this literature. You have three kinds of explanations. The first explanation, you can link it to Dominique Landlevy, who is a French Marxist scholar, excellent scholar, very consistent in their research for decades. And what they say that you had in 1979 a coup, a monetary coup with a huge rise in interest rate. And with this huge rise of interest rate what occurred? People that have some capitals, the financial class was able to increase its income. So the revenge of the rentier. In the period after the war you had a strong labour movement, you had a lot of social conquests and so on. That was not all marvellous of course, I'm not saying that, but you had this strengthening of labour. And then at the end of the 70s you had a strong backlash. And one of the key moments in this backlash was this rise of interest rate, with the aim of restoring the position of the owner of capital, the rentier. So that's fine, I think that's very important to explain what occurred at the beginning of the 80s. However, nowadays we have a negative interest rate. So you cannot say that the interest rate is the main driver. You need to find another way to explain how finance is still at the centre of the current configuration of capitalism. You have another explanation that is this explanation of the term toward finance in order to accumulate. And that's the idea that financial films, of course, but also non-financial films, are more and more engaged in financial investment. And that's the argument of Suizi that explained already in the late 60s, early 70s, that at some point there will be a lack of investment opportunity for big monopoly capital, and then they will shift to finance. However, the problem with this explanation is that you cannot explain in the medium to long run how it is sustained, how it is able to overcome recurring crisis. And the third perspective is the limits, is the shareholder value perspective. So that's this idea that you have a comeback of the shareholders that took the power within the corporations in the 80s. And they took the power and they were able to extract more profit out of corporations than they were able before that. The problem with this story is also that how do you explain its resonance in the long run? If you are not investing enough, at some point your profits will fall. And what we are observing is that we have an important level of profit for decades now. So my explanation is that in fact you don't have financialisation in general from the 80s up to now. In fact you have two moments of financialisation. I have a nice graph but I'm not sure that it's very clear. What do you think? I will try to comment on that and after that there is a very simple table. In fact the first line in the bottom left is the first period, the 80s up to the mid 90s. At that moment you had this revenge of the rancher and you had a financial turn of accumulation. Why? Because you have very high interest rate. So what occurred at that moment? People owning financial income were able to improve their own position and in the meantime firms were more interested in investing in financial products and were able to make some financial profit out of that. So that's the first part. That's the part of financialisation where high interest rate were the key drivers of the process of financialisation. And then you had the crisis. You remember I showed you that you had the first saving island crisis in the late 80s, then 2001 and so on. And in fact we still have an hegemony of finance but its routes are completely different. Right now the main driver is not high interest rate. You have a very low interest rate for two decades. The main driver is a new configuration of competition and globalisation. You have a monopoly capital that is reorganised at the world scale with substantial corporations that have built new strong positions since the 80s and the 2000s and they are now protected from competition and they are able to make a lot of profit without investing. And that's all this financial capital is sustained from this monopolistic position. So the simple table is this one. You have financialisation one and two. In both cases you have low investment, high distributed profit, high financial income and stagnant wages. However, in the first case you had high interest rate. One knows they are very low. And in the first case you had high level of competition. That was the beginning of globalisation, some catch up from Asian countries and so on. Right now you have monopoly in global value chains with some integral dimension that I will not discuss here. And it was not the same kind of financialisation. In the first time you had a period of restructuration of global capitalism with an unleash of competition but right now you have what I propose to call predation. Faisi, how much time do I have? Five minutes. That's not exactly enough but not a drama, not a drama. We will manage to do something. So the last idea I want to introduce is the idea of finance in general as power. And the key concept here is the concept of liquidity. This woman is Susan Dobrinoff. She is one of the most important marxists in French political economy in the past decades. Just a few years ago. And she made a lot of work on finance and monetary marxian political economy. And one of her key contribution is to draw on this idea of marx of futures capital as capitalisation, as anticipation on the production of future value. And what she says is that futures capital is a claim of anticipated valorisation. It's to quote Franco Cheney, another very important marxist scholar, is an accumulation of drawing right on wealth that is yet to be produced. However, this is not just an issue of private people making bets on the future. As it goes through the banking and the monetary system, it's in fact a social phenomenon. What is occurring is a social anti-validation. The credit system backed by the central bank is backing the bets made by private agents. And in this sense, the owner of futures capital, they think that they owe the value, the face value of their assets. And they will fight to preserve this face value of their assets. And in this sense, the owner of financial asset will ask the social condition of valorisation to adjust to this anticipation. So the key idea here is the following one. Future capital is value anticipated. But that's not just a bet in the air. That's backed by the banking and the financial sector. And as it is backed by that, there is a social fight in order to preserve this anticipated value. I will try to dig a little bit in the detail with an example. Local example, Mark Carney, governor of the Bank of England, he made this remarkable contribution three years ago about the link between finance and climate change. He said that we have a problem because if we take climate change seriously, we need to keep hydrocarbons in the soil. However, if we do that, we have one third of the world capitalisation that will dramatically diminish because they are all directly linked to oil industry or are directly linked to them. What that means? That means that financial markets are anticipated that we will not fight against climate change. And they will do whatever it takes to preserve that value. And what Mark Carney was saying is that you need to be ready to have a financial crisis in his terms or financial devaluation of this asset if you want to take service to climate change. So all the other financial assets are fighting for this value anticipated. They are fighting through liquidity. If you have one single firm that is behaving more socially or responsibly than the other, of if you have one single country that is having more economics to a very significant extent, what will occur? They will be punished by financial markets. What that means that they will be punished? That the owner of financial assets are able to sell these assets and to remove their wealth to other assets that are more profitable. So liquidity is the ability to pick up where it's the more advantageous. This is the source of the power of finance. Finance is so powerful today because it can pick at the world scales where is the best opportunity for it. Equality is the ability of finance to discipline projective units centrally. Financial markets are centrally evaluating the opportunity at the world scale. However, liquidity, I am explaining that and I think that it's really convenient, but in the meantime liquidity is not just this ability of financial markets to pick up the best opportunity. Liquidity is also the condition of non-crisis in finance. When you had a crisis, it's when you do not have liquidity, when you are not able to sell your assets. So one government are explaining that they are fighting in order to maintain liquidity, in order to preserve financial stability. In fact, they are giving an implicit guarantee to the owner of financial assets that the profits that they are expecting will be delivered. If liquidity is decisive in order to maintain financial stability if public authorities are promising that they will maintain financial stability, that means that they are guaranteeing the right to profit to the owner of financial assets. And maybe I can give you one example of that, two examples of that. The first example is the quantitative easing. The quantitative easing, and it has been acknowledged by all research, even by the ECB, its own research, that it has filled inequality. Why? Because with quantitative easing and the buying of assets, there has been an inflation in the prices of financial assets, and rich people are the owners of most of these financial assets, so they were the people that benefited the most from this specific policy. And I give you a second example by Adam Tooth that has made a very interesting book about this decade of financial crisis published last year. And he said that there is a kind of ambivalence in this simplification of stress test and new way of supervision of the banks. Because as soon as the authorities say that this bank is safe, that means that in the case of crisis, the state will come to rescue it. If you say that it is safe, that means that you think the state is validating its activity, so it's validating the fact that it will help it in case of crisis. Conclusion. So we need a critical political economy of finance. I tried to give you a sketch of the various dimensions of this kind of research. But the main point is that we need to look at finance beyond the numbers. Fiftious capital is not only a matter of measuring specifically the weight of finance. We have to do that. We need to map out all the channels. But we need also to understand what is at stake. It's in fact a kind of appropriation of the future, a pre-appropriation of the future, a pre-education of forthcoming value creation and political entrenchment via financial stability mandates. So this idea is very the core argument in the book. Is that in fact the rise of future capital is a foreclosure of the future. It's a pre-allocation of the future by the owner of financial assets. Financial stability is then financially germany. Fiftious capital assists to be a dynamic factor. That was the first idea of Marx. It's more and more a dead weight and social reproduction. And it's calling again and again and again the old sovereignty of the state to be saved and to squeeze the social body to feed its own profits. So, against financial stability, we need boredom. To protect public budget against austerity, to protect social debt, employing incomes and decarbonise the economy, it is necessary to reduce the balance sheet of financial actor and def-financialise social life. So that's creating a much smaller financial system or through debt jubilee or through inflation that's reducing the liquidity to protect people and assets from the autonomous movement of finance. So that's capital controls, specific banks. And that's also socialisation of financialised social function. In particular, students, the cost of education but also pension systems, health systems. All of that means that we need to make finance small and modernised. In fact, we need to make it die of boredom. Thank you very much. Thank you very much. Cedric, that's excellent. So, we will now hear from Carolina for a few minutes. OK, is he working? Wait a couple of minutes. OK, so thank you, Faizi, for inviting me to be here today. Well, Cedric has been working on Fictitious Capital for a while and his book is amazing. I recommend everybody to read it because I think when you work with a Marxist framework you get a lot of criticism towards, oh, this is just too abstract and so on. And I think Cedric has been able to give more, you know, to make things more concrete. And that's, yeah, we should spend time reading his book. But I'm also happy to be here and feel a little bit nostalgic. As around two or three years ago I was here helping to organise this seminar as a PhD student. So I'm feeling, yeah, thank you very much. I'm very happy to be here. So, OK, so let's start with what I agree, which is easy. I think I do agree with Cedric's framework. I think it makes sense. I believe it's very difficult to argue against the idea that we are still, you know, that we're still living on this kind of financial hegemony. I think this is very clear. And it's very difficult as well to argue against all the severe consequences of financial crisis and also against the idea of inequality, moderate economic growth and so on. So I think this is all very visible. So in this sense I think Cedric is placing us, posing as a very interesting question, which is why this new configuration of capitalism with this financial hegemony, why so resilient. So I think this is a key question. And one point here is that Cedric's argument. He actually has put in forward the idea of how we can move beyond this controlling finance. And the way he's doing that is kind of saying, well, maybe we should try to understand what finance is about. Is this deeper attempt to challenge the relations that finance has established with every single sphere or sector of our economy. So this is a very interesting effort. And I think, of course, that you see, the key interesting aspect of all of this is to bring this alternative framework, which marks framework for the concept of fictitious capital. I think this is key, so it's a great work. So Cedric has a very, in a way, concise definition of fictitious capital, although it didn't look when he was presenting that concise. But it is, he's saying basically, here you go, fictitious capital is a capital that represents a claim over wealth that is yet to be produced. And so in that sense it's reproduction and expansion implies, of course, the growing of future production and so on. I'm going to go back to this, to a sort of disagreement of that definition, although I do think that's part of the definition in a way. But I think the point that when you look at this category, fictitious capital of that definition, what we have here is not so welcoming nowadays view and framework that places a lot of emphasis on how we understand wealth and creation of value and so on, which is something that Cedric was trying to explain to us as well. And I think this is very important because if you look at more traditional economics, just for avoiding the mainstream, we don't have this concern anymore with the creation of value, where value is coming from and so on. So I think fictitious capital has this, it kind of replaces that question in the background because what's so special about this category have fictitious and have capital. So what's going on here? And when you're trying to make sense of that category, what you're actually trying to make sense or where you're heading to is to have a very clear view of how value in wealth is created here. But not only, it also demand us to see then the link with this kind of capital production. And I think this is where things get very interesting and Cedric mentioned that during his presentation, but he goes through his book in more detail. The key aspect of this fictitious capital is how it develops, is a capital that develops its own dynamics. It kind of gets at life and it goes on and on. Right? Sorry? Yeah. So that is from that aspect where many of these contradictions and between finance and production where you emerge, you come from. And that's interesting because at the theoretical level this is also this endless debate about the difference between fictitious capital and interest-bearing capital. I'm not going to go there because I almost wasn't able to finish my PhD trying to understand that. But I think here the difficulty as well is the difficulty that is in Marx. I'm wondering about this different kind of accumulation, the fictitious accumulation, the real accumulation when you're dealing with... which kind of accumulation you're dealing with and how they are linked to each other. So it's not just us that we're struggling to understand him. Marx was also wondering, okay, when, how we can understand that. So at that moment is when you come across with so many different kind of capital, the money dealing capital, interest-bearing capital, the fictitious capital. But I think there's one point and I do like being fine steak here is how we look at production as a whole and how actually the accumulation itself keeps going regardless of what's happening to fictitious capital. And another key point here is how fictitious capital is able to carry on extracting surplus value, kind of attaching itself in this kind of sequence of capital. So in that sense of production carry-ons, extraction of surplus carry-on, because carry-on, and I think carry-on. And I think that's my... I don't think we disagree on that, but maybe it's just a matter of emphasis. I think from that perspective it's not just fictitious capital, it's not this capital that represents claims or overwhelm that's to be produced. It's also about this movement of capital where you get a moment where because of institutions and regulations or most like deregulation, we have this facility to transform any kind of stream of income into this tradeable asset which then can be traded. I think we should seek fictitious capital as all this process because I've been thinking more about that recently. A example that is very easy to grasp what I'm trying to say is like the mortgage kind of aspect that goes back to the 2007-08 crisis. The mortgage lending per se is not itself, from my perspective, the fictitious capital, but it's how actually then this lending and borrow relationship becomes tradeable assets and then what happens to that. I think this is important. I've been working with government bonds and fictitious capital in Brazil, and once I was giving a presentation and it gets a moment in Brazil, especially in the mid of 2000s where the public debt is actually decreasing, and someone in the audience is like, oh, so this is de-financialisation. This is the leverage, and I think it's not what I'm trying to say. So I think it's important to kind of move a little bit away from this idea that debt per se can be fictitious capital. So I think this is my main disagreement and just one extra minute is that if you were able to clarify that a little bit more, we're going to head to a situation where, and I think that perspective Cedric doesn't disagree with me, is that yes, fictitious capital is useful for the banking credit system in terms of this lending borrow relationship, but it's also this contradiction that it carries when you have this process of securitisation and so on. And from that perspective, fictitious capital is the link between crisis, between production and finance both, so the explanation of financial crisis is when you get where you get this ability and this part of the explanation of growth and so on. So I'm going to sum up here that financialisation for me, the idea why financialisation has been theorised by a more critical political economy literature in economics, is because it's not just the finance per se, it's not the increasing of finance like you get the Epstein approach, or more financial transaction. I think it's about actually the contradiction that comes with this increasing of financial motives and that contradiction you're just able to grasp if you have such a category in that perspective, I do agree with your point on Minsk. Okay, that's it. Thank you. Thank you, Carolina. Okay, questions, comments, contributions. Okay, yeah. Actually, wait for the mic. Yeah. So I just have a question because although the capital is fictitious, the sort of innovations and the product of investment aren't since the 1980s, like you say, globalisation has heavily been in parallel acceleration as financialisation and it has also created certain material products which are not fictitious. So how do we face the fact that definancialisation also has to be followed by actually a sort of very proactive attitude to the effects of the innovation which I mean, namely plastic, for example, or technologically, the amount of e-waste we have, how do we face that and face the fact that we need to financialise how... Okay. Yeah, okay. So I think I sort of have two points at which I want to discuss. First of all, I'd just like some clarity about how this idea of financialisation differs from ramification. What's the relationship? What are we talking about there? And then secondly in terms of practice in terms of actual politics then how do we then begin to bridge the gap if we're talking about the differences between the financial processes and the political processes because it seems the further away you move into the meta finance processes the further away you move from labour and the claims they can make on in terms of the politics of how that should be regulated, how it should be regulated and in whose interests it should be regulated. Great, thanks. Thank you for coming. So I guess I wanted a little bit of clarification on your definition of fictitious capital to the extent that when I hear a claim on future value creation or something on the lines of that that sounds very similar to essentially how I conceive of other forms of capital. So if you want to call it investment for example capital in the form of you know a robot or something or some form of automation is also a claim on future value creation by that asset. I mean if you think about asset in terms of its core mainstream accounting definition is a claim on future value so I was wondering how that differs from the other forms of capital. Great. Be getting on. Yes. I thought that last point was a good question. I wanted in a sense to go also to go back to related to that to go back to your reference to De Bruunhoff and the question of bank credit and fictitious capital and whether or not you include bank credit within the category of fictitious capital. When you put one of your slides up you had bank credit there and you talked about the three essential forms of fictitious capital you actually excluded bank credit and I think that's right or where you were talking primarily about bonds, private debt in the form of bonds I thought but maybe I got that wrong. In any event that goes back to Carolina's point in a way which is that if you just have that very general definition of fictitious capital as anticipating future value creation then you would include bank credit but if on the other hand you want to emphasise as I think Mark's deed the fact that there are tradable securities is fundamental to the concept so bonds and shares and securities generally are essential then you wouldn't include bank credit at least that's how I've seen it but I'll be interested in your views on that. Take those first. Thank you very much. Thank you very much for these questions Carolina for your comments nice comments. So maybe just to I will take in the reverse order maybe. So bank credit according to me is included in fictitious capital bank credit above savings so in fact in Mark's time there was a small part of bank credit about savings but right now that we are in a purely monetary system where money is purely based on the legitimacy given by the state and by the central banks all the credit system is based on nothing but political trust so from this point of view the whole process of creating money through credits is a kind of anticipation of future value and maybe I will clarify your point on that. In fact when you have a book value of a firm you have the value of the machinery, you have the value of the buildings and so on but that's not the financial value of the firm on the capital market and the difference between these two dimension is this process of capitalisation of future profits. In the same way when a firm is buying new machinery with bank credit the bank is making a loan but it's also the interest is relative to the ability of the firm to pay the interest depends on the ability of the firm to make profit in the future so you have also this anticipation in both cases so I think that the real unifying concept of fictitiousness is the fact that it's capital that it's not here, that it's to come and in Mark's time that's very clear because he said that it's fictitious because it cannot be two things in the meantime. For example if you have a share, a share it's a representation in part of a machinery of the firm plus the future profits but the machinery is here and the profit are not here and the share is traded separately of these two phenomenon so it's kind of double accounting in the same way if you have a loan the bank is counting on that money to be repaid in the future but the enterprise is using that capital right now in order to develop its activity so in this process you have this, you mentioned this idea of unfolding separating multiple layers but this multiple layering is of course very present in the complex furniture product of today but it's already here in the most basic forms of banks over savings that loans over savings that you have already this de-rubling of the fact that the bank is counting and receiving its money back and the enterprises are the household using the money at that moment so at least I use that in this way and that's also very important I think politically that's the reason why I put the emphasis on that so in terms of politics that yes so in terms of politics that the question of the problem that we have with financial issues is that it's far away from the point of production and in fact that's also a problem that we have in France right now with the movement of Gilets jaunes because the yellow jackets right now are fighting very far away from the point of production and they are asking some forms of social justice and so on but one of their key claim is that they want fiscal justice so justice in terms of taxation and who were the forces that benefited the most from Macron actions in the past three years that's corporations that have seen huge decrease in their taxes so you see that here we have this connection between financial profits, taxation and political contradiction that's not of the point of production but that's still issues that are some kind of class issues mediated through the state and I think that was also one of the strengths of RV's point about accumulation by disposition is that in fact strategy of profit makings rely to some extent at the end of the day rely on what is going on at the point of production but in our complex society there is a lot of institutional past between these two moments of financial appropriation and production of value at the point of production and one of them is the action of the state excellent question about in fact something is occurring at the real side you have a huge accumulation of financial profit in northern country but of course you have globalization and a lot of new operations that you perfectly right that's why in the book in the last part of the book I developed this part more concretely stressing the fact that a large part of this future capital is based on position taken in the southern country that make a lot of transnational firms to anticipate future flow of income and don't forget that future issues don't mean that is completely out of any empirical validation in Marx there is this idea that the viciousness is linked to a bet on the future and in fact this is the kind of process that is occurring what you are making FDI in the southern country you are betting on future flow of income that will go back to the north so that's part of the phenomenon but this phenomenon of globalization governed by the north sustaining financial profit and then financialization is part of the story but it's not all the story you have seen the huge rise in future capital that I have explained so here you have this underdeveloped process and that explains why the state need to step in to maintain this level of future valuation did I forget somebody somebody there is this idea but I think I completely agree with your comment on that Carolina and the fact that part of the process of the rise of future capital is also a problem for accumulation because it's fostering crisis on the one hand it's caused by crisis or insufficient accumulation but on the other hand by itself it is going bigger and bigger fostering instability and then hurting the ability of the productivity system to expand but I think I agree with this point OK we have a hand there at the back I'm afraid of Thanks very much that was an absolutely excellent presentation I would like to push you a little bit more on the political transcendence of financialization as the core of neoliberalism and as a process that has transformed modalities of social reproduction and gave a number of examples as well but in doing this in changing forms of social reproduction in changing the ways of production itself it has affected social groups in very different ways that don't map in a simple manner to class so how do you mobilize against financialization with what in mind as what comes after what to fight for without falling into populism since financialization itself doesn't map into a clear class political set of alliances that you can immediately apply for in order to press I'm struggling here with the words but I think you get the sense what do you do next in terms of both mobilization and alternative projects very simple question Do you know your process so where do you start to make political claims where is the platform for political claims You over there Thank you so much for the question because I was wondering about financialization as well and I would like to go step before because I didn't really understand your analysis of the mechanism and as Alfredo I think correctly said is we cannot homogenize the classes of all fictitious interests into this one claim of what kind of interest they have so I was wondering in your analysis which parts of when you break it down to these four interests of bank credit and public debt and companies and shares and stuff I felt that when you said there were high interest rates and then out of a sudden there are no high interest rates anymore and it either gets replaced by another claim of how fictitious capital reproduces itself isn't really fruitful to assume this homogenous interest among all the class like the class of fictitious capital or can we not gain insights by splitting it up and understanding even conflicts among these groups to understand how the mechanism actually resolves Okay, at the back Thank you first of all for very thought provoking talk. I have two questions and I don't know your work so well so I hope I don't stray too far from your call but one is about macro potentialism and the fact that the global governing community has now kind of endogenized Minskis ideas, they very much rely on his insights now do you see that as having any potential to lessen these future increasing cycles of boom and bust or are they completely inconsequential? The other is about the spread of financialization down in the class system of society so we are seeing that increasingly ordinary people are investing in financial markets and becoming creditors does that have any potential to alter the dynamics of this or is it a small phenomenon at the fringes of this? Thank you and then here Behind you Just wait for the mic Thank you for your presentation I think my question is perhaps much more basic in that sense You talked about the gap between financial accumulation and real accumulation You talked about the gap between the finance and real struggles and things and also about scholars who talk about the autonomy of finance and so on. I was just wondering where does that leave us with Marx's labour theory of value and does this really affect everything that you say? Does it need revisiting? What is your comment on that? Okay, thanks Was there a hand here? Did you hand up that? Maybe it has already been asked what I am asking again but I put it into different terms the legitimacy of the legality of private property to be applied to finance capital I wouldn't take for granted and I think this is a form of private property for which the legal systems were not made the idea of private property when it emerged in the course of human history in the previous centuries did not imply this form of property Yeah Let's see One more One more Really short I guess because I appreciated your presentation and really like clarification at this point which is that the coming back should pitch point on bank credit and bonds so you went in your response to you went around looking at future monetisation but what about collateral? The key difference I would say is that in the case of bank credit you have a collateral so they don't really believe in future they don't care about future monetisation while they trust in collateral so that will be the big difference with bonds maybe you see that's not relevant and that would be the question Just to begin by this last question I think the collateral is exactly the issue of the ruling so the bank consider that it has the collateral in case it needed so it can use in its accounting building its project as it was as it fit its capital and in the meantime the person that took the loan is using that loan and that collateral to develop its own project so this idea of the doubling that is very key that's another way to stress this overlaying of future capital is already present I think in a simple loan with collateral in my view so reverse order again private property excellent point William Beater that he is right now chief economist at Citibank in September 2008 just after the state stepped in to save the insurer made a comment in the financial times saying that I was considering that the financial sector was responsible but if it's not responsible and is not able to pay for his own error there is no point of having private property of financial institution so your point is exactly that because in fact right now we have private profits over finance but this institution are implicitly backed by the state and I didn't have the time to develop completely this idea of blackmailing through liquidity but if financial institution are able to blackmail the states all of us to gain some support it's because they are providing indispensable services to our complex societies they are allowing the integrity of the payment system they are allowing the funding of ordinary activities and when they stop when they fail everybody is suffering from that and you have a huge crisis so that's the reason why they are backed by the state and that's right that the state is backing this financial function the scandal is the fact that it's backing this public utilities and guaranteeing their profits so your point is very important and I think that this moment of the crisis was a very important moment because this was in debate reading that by return the financial times was not important that was one of the options after the crisis to socialize part big part of the financial systems and there has been a choice that was not this one and in the book by Adam Tooze you have very good quote from Obama where he explained very clearly that well in the US we want a private payment system and of the debate in fact because we are not a socialist country and so on but there is a kind of intellectual inconsistency here and we have to stress that and we have to be prepared for the next crisis to make this argument Marx's theory of value so difficult question you agree so a lot of debate and I'm not an expert in this debate in fact I like the way Riccardoella's theory phrased it in the sense that in fact you have very various meaning in the Marx's value theory and in fact you already have some value at the level of abstract labor in the labor process at the moment of realization but also in the credit system in anticipation of all that of course at the end of the day you have human activities and nature at the root but I will not make any calculation to sustain my point based on the Marx's label theory of value in fact I think that's very useful to point out where is the articulation of the various sphere the monetary sphere, the financial sphere the German regime the production moment and so on so you need this theory in order to organize this various sphere but to make some math out of that I think I don't see how we can do that but I'm really not an expert into that and I don't want to make two big claims so that's from your kind of regulating ideas that helps me to organize my thinking and my surgical development but not empirical stuff means key and ordinary people so yes financialization of everyday life means that we are embedded in financial relations all of us through pension schemes through student debt loans through and so on and in fact the same people can be divided on the one hand they are interested in resaving in high level of financial valuation in order to resave their pensions and David Ari for example told me that he was very against debt jubilee, public debt jubilee because his own pension fund will be earned by that and he was not ready for that so you see that even among Marxist people so I understand this point that's why in my conclusion I stress that when we think about definitialization we need to stretch in the meantime we need to rebuild non-financial way of dealing with financial social function first that's maybe more clear than in the US because the pension system most of the pension system is public and is not linked to pension funds so basically I'm paying the pension of people that are pensioners today I'm not making any kind of savings for later and this is a way not financialized because it's in real time of including the various generations and I think that's an example of how you can deal non-financially with the social function that is taken into account by finance today but that's a problem for sure politically we need to articulate that and people will be worried about that and the Minski completely accepted by the mainstream global governance system in fact that's only part of Minski because you write they buy the financial cycle it's completely mainstream right now and I think that intellectually that's an improvement there has been some kind of progress however Minski was very aware of the need to regulate finance and to make it more small and this part of Minski has not been co-optated by the mainstream so there is a kind of instrumentalization of Minski that's Maria Ivanova she's in London and she's pointed very clearly in a paper I think in a I don't remember in the economy and society I think about Minski the use of Minski in the current crisis and she's perfectly right there is an instrumentalization of Minski but that's only part of Minski and Minski is still I think Brian is a thinker and a useful thinker of course yes homogenization of financial actors are they different do we need to stress their homogeneity of financial claim of financial profits do we have to stress the various sectors in finance I think my first movement was to unify them why because they have an instrument to make everything comparable that's financial markets through financial markets you are comparing risk and rewards among a lot of class of assets you are comparing bonds in developing countries with capital risk in one sector with insurance in another one and so on so I think that it's fair to stress that there is this moment of centralization and in fact that's François Chenet is making this point very strongly and I think he's right stressing the fact that finance is the centralization of the power of capital because you are comparing everything in one place however I agree with you that there are some contradictions and in particular with this very low level of interest rate insurance company are suffering a lot because when you have low level of insurance you need to have a lot of reserves as an insurance in order to be prepared to cover future risk so insurer were against this policy of low level of interest rate while in the meantime in order to preserve financial stability funds were more in favour of this policy of interest rate so you're right there are some tensions maybe we need to stress that more I take your point and there was this slight late question about the political subject in face of finance so in fact in France we had a political subject on the left unified against finance for 20 years that's the association attack that's an association against for taxation of finance and solidarity basically and it's very clearly on the left and articulated with a lot of movements, labour movement climate movement and so on so on the political sphere it plays very well in France because it's making the link between these various movements and the issue of finance and asking for example recently they made some action against the banks about about investment in fossil fuels they also made some action against Google's about issue of taxation and so on so you can organise that you can have this kind of organization but I agree with you that's not a mass movement that's not the same thing as a trade union that's not an immediate solution for the future that's a more intermediate state in terms of political articulation what I will say is that in fact there is many way to be an anti-capitalist today there are many contradictions of capitalism of course there is exploitation on the labour point that is crucial but when you are dispossessed of your futures as pensioner because there is a financial crisis and your pension will be lowered you are in a fight in a position of fighting against capitalism from your position of pensioner and when you are suffering from pollution in an area due to the activity of a transnational corporation you are in fact in a contradiction with the dynamic of capital accumulation by private ownership but you are not on the point of production so I think that we need to assume we have to assume this plurality of exposure to the negative impact of capitalism and the political building political actors surrounding these values I don't think that nowadays it will be possible to have a no more generous subject as we used to have but I'm ready to be convinced otherwise really okay we have time for one or two more questions sorry can you sort it go? oh sorry there will be a fixious human capital in the sense that there is over investment in higher education private actors in the hope of private rate of return as well as the society also or the state also invest in the hope of social rate of return but in actual practice most of them will be under employed suppose under employed and the rate of return both private and social are having come back so what part of fixious capital is actually fixious human capital because there is quite a lot of investment in human capital especially in Asia for example and the second part is also is that how much of is that fixious human capital if there is over investment in education in the hope of migrating to a greener pressure that means to the first world countries etc in the hope of getting getting appropriate rate of return in the private domain but actually that doesn't happen which this neoliberal migration specialist call as brain game that only 10% will migrate but 90% are stained stained means that's a brain game whereas I would think that if 90% are frustrated that they could not migrate for what they have studied that means it actually fixious fixious human capital does it make sense okay if there is any last question yep go ahead and then we'll go ahead no go ahead quick there is the mic there oh sorry your quoting too referring to can you speak up banks having if they've passed their stress test but if there's a factor crisis and they go bank there's a crisis and they're in trouble then the state has to help them out as I understood it I might be completely confused on this and you may have to correct me on this as I understood it banks themselves did their own stress test it wasn't the central bank because they hadn't got the resources have I misunderstood something I thought it was not the central bank that did the stress test the bank did their own so could you put me right on that thanks mum and then finally over there thank you for the presentation I thought it was really interesting I learnt a lot from it I'm not an expert in literature it's interesting distinction you made between like the first the rent here the return of the rent here kind of earlier cycle and then the current cycle and the lady on the panel also touched on the difference between interest bearing and non-interest bearing capital and I think if you look at the asset classes that are being invested in it's quite different what you're investing in a bond because if you're investing in a bond you're technically lending money then investing in the stock market and I think the recent cycle of like stock market capitalisation is driven clearly by low interest rates ie leveraging so I'm wondering maybe I could just benefit or we could all benefit from short elaboration on whether in your analysis you look into the different asset classes what's the difference or in other words is a distinction between fictitious and non fictitious capital based on what the money is invested in like where is it does it become fictitious capital at the source i bank lending or does it become fictitious based on what I invested in so I begin by this last question in fact I had a slide with the various dimension of fictitiousness in Marx because one is talking about fictitious capital there is not one meaning in fictitiousness or it is fictitious because it has not been accumulated previously it's created out of thin air by the banking sector or it is fictitious because you give value through shares that is not a value that is already here that's an anticipation on the future stream of value so in this case the fictitiousness is related to the fact that it's not here and it's an anticipation so you have this or fictitiousness out of the origin it's not coming out of the accumulation process or fictitiousness in relation to the future but you have also fictitiousness in the public debt because you consider public debt to be fictitious capital, why because it's not invested in the accumulation process and so it's something it's a kind of accumulation because you will receive an interest on that debt however it's not a debt that is invested in the accumulation process so you have a various dimension of fictitiousness it took me some time to disintegrate that and that's the reason why I was able to try to figure out where is the fictitiousness for the various classes of assets your question is not naive at all it's a very important question in fact stress test there is a very more than ever collusion between the private sector and the regulators because it's very complicated the financial products are extremely complicated and by themselves the regulators struggle to understand what's going on so you're right when stress test are made there is a kind of negotiation between the regulators and people in the bank and they negotiate what will be the stress test but my point is that when the regulators have something and one specific kind of stress test it's in fact a political agreement and when they have made this political agreement they run the stress test and when it's run there is a result if it's positive that means that the state will come to rescue the bank afterwards and the first question about the human fictitious capital I'm not sure I will go very far in this direction because I need to think about that but one important point is in fact a student debt is kind of human fictitious capital there is an investment in education and when you have higher an employment than expected or lower wages than expected you have a higher rate of the differences on this debt and that's the kind of devalorisation of this capital Okay, thanks Let's thank Cedric and Carolina Everyone is welcome to reception