Fictitious Capital And Capital Market

This dissertation discusses the performing scenario of financial capital and its regular pattern based on the fictitious capital theory.Differing from the others engaged with fictitious capital research who mostly stress the influences of fictitious capital on real economy, the author tries to put the research emphasis on the process, mode and extent of capital fictitiouzation. For this purpose, the paper makes large efforts to explore some new subjects. For example, it gives a complete and detail annotation to the modern connotation of fictitious capital which has seldom been covered by the other researchers, and combines the capital fictitiouzation that is a pure economic theory with financial innovation being a process of financial practice.'Fictitious economy' is different from 'virtual economy' as some people argue that are identical. Fictitious economy just means the movement of fictitious capital, but virtual economy mainly refers to the state and process of real economy integrated with modern IT (e.g. E-business). As fictitious economy comes into being and become prevalent, it will give birth to a revolution of economic theory, forming a new value system in which the value of commodity is completely determined by people's confidence and expectation to the commodity.Although people have not had a clear knowledge about the transmitting mechanism by which fictitious capital affects real economy, fictitious capital changes the performing pattern of finance, and greatly challenges the monetary policy made by currency authority. At the same time, it serves as a more direct and sensitive visualizer to national macro-economy. Fictitious capital also provides enterprises more and more banking tools, and changes the operation order of banking institutions.The pervading of fictitious capital makes the financial liberalization trends in developing countries not as so smoothly as U.S economists R.I. Mickinnon & E.S.Shaw presented. Under the fictitious capital background, the countries pushing financial liberalization should have a prudent judgment to their macro-economic environment and properly arrange the liberalization order within their financial systems as the liberalization drives.Capital market is an institutional platform fictitious capital performs, which is based on a credit chain as core principle. In this chain, properties take the form of shares, shares take the form of securities, securities are on the market, market is risky, and the market risk should be born by all participators. If the supervisor of capital market disobeys the core principle, the market will go into disorder.The author suggests that raising capital is not one of the capital market's functions; it is only a means by which market allocates capital. Once it was referred to as a prime function of market by the market supervisor or other strong participators, the capital market, being an institutional resource, would be abused and collapse eventually.Capital is not a mechanical designation, and cannot be simply copied from the frame of developed countries. It is a 'living body' in nature, needing many environmental factors to support within which social cultural background is the most important.Chinese capital market, having existed only more than one decade, more or less encounters the obstacles above. In order to surmount the obstacles, Chinese market supervisor should combine the market with Chinese culture step by step, establish multi-level market system, and accept different operation pattern from developed countries according to the country's situation.