ICF FinalAssignment HendyDarwin
SUMMARY
THE DYNAMICS OF THE CAPITAL/INCOME RATIO
PART TWO
INTERMEDIATE CORPORATE FINANCE
BONA CHRISTANTO
HENDY DARWIN
00000007515
BUSINESS SCHOOL / MANAGEMENT
PART TWO
THE DYNAMICS OF THE CAPITAL/INCOME RATIO
[THREE] THE METAMORPHOSES OF CAPITAL
(The Nature of Wealth: From Literature to Reality) If we took a closer look, the differences between the nineteenth and twenty-first centuries are less apparent than they might seen at the first glance. The process of financial intermediation (whereby individuals deposit money in bank, which then invests is everywhere) has become so complex that people are often unaware of who owns what nowadays. Back in the nineteenth-century, the reinters that lived off the public debt were clearly identified. Is that still the case today? This mystery needs to be dispelled and studying the past can help us do so. Capital is never quite: it is always riskoriented and entrepreneurial, at least at its inception, yet it always tends to transform itself into rents as it accumulates in large enough amounts – that is its vocation, its logical destination. (The Rise and Fall of Foreign Capital) It is important to understand that these very large net positions in foreign assets allowed Britain and France to run structural trade deficits in the late nineteenth and early twentieth century. It is essential to realize that the goal of accumulating assets abroad by way of commercial surpluses and colonial appropriations was precisely to be in a position later to run trade deficits. The advantage of owning things is that one can continue to consume and accumulate without having work, or at any rate continue to consume and accumulate more than one could produce on one’s own. Between 1950 and
2010, the net foreign asset holdings of France and Britain varied from slightly positive to slightly negative while remaining quite close to zero. When we compare the structure of national capital in the eighteenth century to its structure now, we find that
THE DYNAMICS OF THE CAPITAL/INCOME RATIO
PART TWO
INTERMEDIATE CORPORATE FINANCE
BONA CHRISTANTO
HENDY DARWIN
00000007515
BUSINESS SCHOOL / MANAGEMENT
PART TWO
THE DYNAMICS OF THE CAPITAL/INCOME RATIO
[THREE] THE METAMORPHOSES OF CAPITAL
(The Nature of Wealth: From Literature to Reality) If we took a closer look, the differences between the nineteenth and twenty-first centuries are less apparent than they might seen at the first glance. The process of financial intermediation (whereby individuals deposit money in bank, which then invests is everywhere) has become so complex that people are often unaware of who owns what nowadays. Back in the nineteenth-century, the reinters that lived off the public debt were clearly identified. Is that still the case today? This mystery needs to be dispelled and studying the past can help us do so. Capital is never quite: it is always riskoriented and entrepreneurial, at least at its inception, yet it always tends to transform itself into rents as it accumulates in large enough amounts – that is its vocation, its logical destination. (The Rise and Fall of Foreign Capital) It is important to understand that these very large net positions in foreign assets allowed Britain and France to run structural trade deficits in the late nineteenth and early twentieth century. It is essential to realize that the goal of accumulating assets abroad by way of commercial surpluses and colonial appropriations was precisely to be in a position later to run trade deficits. The advantage of owning things is that one can continue to consume and accumulate without having work, or at any rate continue to consume and accumulate more than one could produce on one’s own. Between 1950 and
2010, the net foreign asset holdings of France and Britain varied from slightly positive to slightly negative while remaining quite close to zero. When we compare the structure of national capital in the eighteenth century to its structure now, we find that