Virtual capital and real capital

The term capital stems from Latin adjective capitalis in its turn derived from caput, genitive capitis, meaning head, head but also everything principal, at the head of something, from which other things depend. In economics, the capital is one of the three production factors, together with natural resources and labor. Capital means wealth as result of the transformation of natural resources in products through labor. Therefore the capital is made by human beings, while natural resources and labor exist in nature: the natural resources are the Earth with all that you can find in it and can receive from it, energy included; human labor is the manifestation of human energy.

Virtual comes from Latin virtus meaning virtue, faculty, and potentiality. It’s an entity existing in power and in a certain way replies to a plan. It’s an imagined reality, conceived, desired, wanted and built, produced and lived by the same human beings.

Real comes from Latin realem, from res (thing) with the meaning of existing, substantial, true. Not only things are real but also ideas and all that is virtual. Real mustn’t be confused with material, which stems from Latin materia, from mater, substance other things are made before, from Sanskrit matram, meaning measurable thing, from the root ma-, to measure and also to prepare with hands, meaning to form. Material is all that takes up space that has shape and body. Therefore, there’s a material reality (things) and a non-material reality (energy, though, ideas) forming the material reality giving birth to new non-material realities, in a process lasting in time.

According to an etymological meaning, the virtual capital therefore is the fundamental principle existing and potentially transforming natural resources in real capital, i.e. in wealth, through labor. So, virtual capital is nothing else than non-material real capital transforming in real material capital. Therefore, virtual capital is a means to produce real capital.

As many other occasions, the human being has upsetted the conditions of reality considering virtual capital as an aim and not as a means. This way, currency had to represent means of exchange and investment was reduced to an aim, while exchange was considered means for the increase of currency. There’s a great difference. Considering the capital as a means, one plays on the will to produce of those who work. Considering it as an aim, one plays on the exploitation of labor, i.e. on the difference between market value (price on the counter) of the products obtained through labor and the value acknowledged to the whole labor (salaries and related expenses) performed (from the extraction of resources to distribution) to offer those same products on the market.

To bring back capital to its natural production means function, in the virtual form (virtual capital) it shall be constituted by an entity representing the commitment to perform the future labor necessary to produce goods and services (real capital) that will then be exchanged with that same entity, so that the virtual capital coincides with the real capital: the first one is commitment or promise to work, the second is the result of work. Real capital, i.e. the result of production, will then be partly consumed and partly used together with a new virtual capital in order to produce new real capital.

Putting that in concrete, virtual capital and real capital must be represented by the same entity, i.e. by the same currency. This if the economic system had been at time zero. But it wasn’t. Today in the world there are already both real capital (goods produced) and virtual capital (legal tender currency) and production requires capitals under both shapes. To enter the actual time and simultaneously modify the current situation, it’s necessary the shape of capital, the currency, represents not just a commitment or a promise of future labor (virtual shape) but also the real means necessary to produce, and that these must guarantee it.

So, Dhana, the work currency is issued on behalf of those undertaking to perform labor and at the same time it’s guaranteed since its issue by the nominal value of real enterprise capitals for a value equal to one gram of platinum per Dhana. This double representation of value (future labor and production means) assures real value, i.e. the purchase power of the work currency.

Rodolfo Marusi Guareschi