“…the real capital stock, which political economists see as the beginning and end of capitalism, has nothing to do with (tangible) book value, which is the sole god of heterodox, anti-finance, economists.”
While this statement may be theoretically correct, it is NOT what we want to say.
Our point, rather, is that forward-looking capitalization and backward-looking real capital are de-linked (and in the U.S. case inversely correlated, as the figure below shows).
I think that Hudson’s reference to ‘book value’ here is misleading; as I indicated above, book value represents forward-looking capitalization at the point of its recording and therefore includes rent which Hudson wishes to exclude…. From his vantage point, it would be more accurate to talk of ‘real capital’, and specifically, of the direct + indirect ‘labour cost’ of producing it.