Home Forum Political Economy Signposts to Capitalization – an Early history Reply To: Signposts to Capitalization – an Early history

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Pieter de Beer
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This is an invaluable response already, thanks Scot.

I can definitely see how, given the CasP framework of encompassing political influence into the notion of capital, straight forward¬† market cap would not be reflective of power. And I can also understand that CAPM falls short because it would necessarily need to exclude specific kinds of social relations, and “external influences”.
Finance has always, in my view, been an attempt to quantitatively assess a fundamentally qualitative field of social ecology, and the subjective aspects of this social ecology will not be representable in an accurate, or meaningful quantitative measure without including arbitrary classifications that must limit the scope of the valuation. As a result, the subjective “God-of-the-gaps” is filled in with pseudo-empiricism that either over-inflates firm value, or vastly under-estimates aspects of the social ecology, or both.

I’m passingly familiar with CAPM, and a few other Valuation methodologies, predominantly because I spent some time a few years back ruminating on and searching for various theories of value. I have my own ideas about what may or may not work as a value theory in reality, but am able to admit I don’t know nearly enough about the way the world (dis)functions to be able to put my ideas into a coherent theoretical framework just yet. (The best and closest description I have encountered so far is Ryan Salisbury’s Priority Theory of Value and his proposed system of Transferics which I believe has fallen dormant for a while now, due to a lack of critical feedback )

In my original post I chose not to look past 1921 into the origin of Discounted Present Value, specifically because it gets very complicated, very fast. The Great Depression, the circumstances leading up to it, and its subsequent results within the world of finance, are extremely complex (and become ridiculously convoluted over time), and there is such a vast amount of literature, that it is more than daunting to someone who has not actually studied the field, let alone worked within it.
Hence my objective is to look at where it all started (for the contemporary system anyway) so that I can see how foundational principles evolved into what is used in practice today.

I think once I have a clearer understanding of the origins and evolution up to the point of the Great Depression, I might be ready to do a deep dive into the 90 years since then.