Chapter 6: Earning Power and the Anthropology of Capitalization

After having looked at the medium of the pedagogy of business, chapter 6 of The Provoked Economy moves into the content proper of the act of business valuation. The vehicle here is again Arthur Stone Dewing, author of The Financial Policy of Corporations, a widely used textbook in corporate finance from the early 1920s to the 1940s. The chapter follows Dewing in his clarification of the nuts and bolts of capitalization:

“Is the value of the business only the value of what the businessperson has ready to sell right away, for example, a warehouse and some stored merchandise, plus some cash in a bank account? No, at least not entirely nor substantially. The value of the ‘going business’ is rather obtained by examining its ‘earning power’, that is, its capacity to meet the purpose for which business is intended: to earn a profit. ‘Earning power’: that is Dewing’s telling expression. The businessperson, Dewing told students, is ‘buying earning capacity’.” (p. 104)

The chapter sides in part with the “anthropology of capitalization” that the authors of Capital as Power have sketched out — a proposal that considers capital as the nexus of social relationships produced by the capacity of capitalization. It also contains a premonition of something that fine analysts of the provoked economy such as Tim Mitchell seem to be working on right now — intriguing! It is also very much inspired by the anthropology of investment developed by Horacio Ortiz — and on his focus on financial imagination. And it is also importantly stimulated by a wider project that should give birth to a collective publication sometime soon — the working title is Elements for a Social Inquiry into Capitalization. The chapter’s conclusion:

“Capital is a claim on earnings, and its value is a measure of the power to hold to that claim – earning power, as pedagogue Dewing would simply end up stating. My hypothesis is that getting just that, in one way or another, is what the business self is about. And that contemporary financial business culture consists, substantially, in the massive accumulation of simulacra that attempt to realize it.” (p. 107)