We mentioned in the last post a scenario where capital transcended human ownership, and became – through law – an entity in and of itself, lording it over mere humans. It sounds far-fetched, but is it? The discourse on inequality is about wealth accumulation of a small number of people, but it is essentially a discussion about the centralization of capital, where fewer and fewer people control that capital. Now, as the number of people controlling the capital decreases, the question arises: what happens if it gets down to two people, or one person, controlling the preponderance of capital? There are political answers to this, and social answers, but – for now – let’s consider the financial side.
In the West, Capital is generated primarily through the corporate-legal structures of western liberal democracy. In essence, companies produce goods and services, and accumulate assets and profits. They grow through acquisitions – other assets – and increase profitability. However, most companies are moving now towards virtualized infrastructures. What that means is that companies own less and less of their own assets, and become, essentially, capital generators, rather than capital owners. Let’s take a hypothetical example… Continue reading “Virtualized Capital: Kafka meets Piketty”