#capitalaspower — Public Fediverse posts
Live and recent posts from across the Fediverse tagged #capitalaspower, aggregated by home.social.
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This transcript of an academic discussion session from Feb 2025 is really worth reading to get a sense of the ideas behind the "Capital as Power" perspective. Features the fediverses own @blair_fix
https://capitalaspower.com/2025/02/capital-as-power-in-the-21st-century/
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CW: Capital as Power Meme - Risk Adjusted Discount Rate
Capitalists who are selling shares of their company on a stock exchange, need to determine what price to sell those shares at. The way they do this, is to forecast their earnings for a given period (usually 3-5 years) and to then use a discount rate to discount that 3-5yr total to present value. And the level of confidence they have in their own forecasts, is what determines how risky their valuation is considered to be. When they eliminate enough of the risk by getting investors to be confident in the future of the company, the discount rate goes very low, and present value goes up (share price).
Part of what we need to be doing, is increasing any and all uncertainty in their forecasts. Strikes, Boycotts, Unionization. Sabotage of their productive capacity, Smear Campaigns, Influence campaigns, barrages of lawsuits, exposing of scandals, pressuring politicians and government bureaus to enact legislation that places the corporate future at risk. All of these make a great start.
" the discount formula, the social habit of thinking with which capitalists began pricing their capital in the fourteenth century.
[...] It calculates the present value of capital based on the future magnitude of earnings. These future earnings, however, cannot be known in advance. Furthermore, since capitalists do not know their future earnings, they cannot know the rate of return these earnings will eventually represent. Analytically, then, they are faced with the seemingly impossible task of solving one equation with three unknowns.In practice, of course, that is rarely a problem. Capitalists simply conjure up two of the unknown numbers and use them to compute the third. The question for us is how they do it and what the process means for accumulation. The previous section took us through the first step: predicting future earnings. As we saw, these predictions are always wrong. But we also learned that the errors are not unbounded, and that, over a sufficiently long period of time, the estimates tend to oscillate around the actual numbers. The second step, to which we now turn, is articulating the discount rate — the rate that the asset is expected to yield with the forecasted earnings. And it turns out that the two steps are intimately connected. The discount rate mirrors the confidence fortunetelling capitalists have in their own forecasts: the greater their uncertainty, the higher the discount rate — and vice versa."
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CW: Capital as Power meme - Mergers & Acquisitions
"From an efficiency perspective, the relentless growth of large firms is indeed puzzling. Why do firms give up the benefit of market transactions in pursuit of further, presumably more expensive internalization? Are they not interested in lower costs?
From a power viewpoint, though, the riddle is more apparent than real. Improved technology certainly can reduce the minimum efficient scale of production (MES); and, indeed, today’s largest establishments (plants, head offices, etc.) often are smaller than they were a hundred years ago. However, firms are not production entities but business units; and given that they can own many establishments, their boundary need not depend on production as such. The real issue with corporate size is not efficiency but differential profit, and the key question therefore is whether amalgamation helps firms beat the average — and if so, how?
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The second important point concerns the meaning of ‘profitability’ in this context. Conventional measures, such as earnings-to-price ratio, return on equity, or profit margin on sales, relevant as they may be for investors, are too narrow as indicators of capitalist power — particularly when such power is vested in and exercised by corporations rather than individuals. A more appropriate measure for this power is the distribution and differential growth of profit (and of capitalization more broadly), and from this perspective mergers and acquisitions make a very big difference. By fusing previously distinct earning streams, amalgamation contributes to the organized power of dominant capital, regardless of whether or not it augments the more conventional rates of return. In our view, this ‘earning fusion’, common to all mergers, is also their ultimate reason."
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CW: Capital as Power meme - Mergers & Acquisitions
"From an efficiency perspective, the relentless growth of large firms is indeed puzzling. Why do firms give up the benefit of market transactions in pursuit of further, presumably more expensive internalization? Are they not interested in lower costs?
From a power viewpoint, though, the riddle is more apparent than real. Improved technology certainly can reduce the minimum efficient scale of production (MES); and, indeed, today’s largest establishments (plants, head offices, etc.) often are smaller than they were a hundred years ago. However, firms are not production entities but business units; and given that they can own many establishments, their boundary need not depend on production as such. The real issue with corporate size is not efficiency but differential profit, and the key question therefore is whether amalgamation helps firms beat the average — and if so, how?
[...]
The second important point concerns the meaning of ‘profitability’ in this context. Conventional measures, such as earnings-to-price ratio, return on equity, or profit margin on sales, relevant as they may be for investors, are too narrow as indicators of capitalist power — particularly when such power is vested in and exercised by corporations rather than individuals. A more appropriate measure for this power is the distribution and differential growth of profit (and of capitalization more broadly), and from this perspective mergers and acquisitions make a very big difference. By fusing previously distinct earning streams, amalgamation contributes to the organized power of dominant capital, regardless of whether or not it augments the more conventional rates of return. In our view, this ‘earning fusion’, common to all mergers, is also their ultimate reason."