Financial Markets and Economic Growth Eduard Braun To cite this version: Eduard Braun. Financial Markets and Economic Growth. Economics and Finance. Université d’Angers, 2011. English. tel-00968723 HAL Id: tel-00968723 https://tel.archives-ouvertes.fr/tel-00968723 Submitted on 1 Apr 2014 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Université d’Angers Année 2011 N° d’ordre 1182 Financial Markets and Economic Growth Thèse de doctorat en sciences économique Ecole doctorale DEGEST Présentée et soutenue publiquement le 27 Septembre 2011 à Angers par Eduard BRAUN Devant le jury ci-dessous : Renaud Fillieule, Rapporteur Université de Lille 1 Antoine Gentier, Rapporteur Université Paul Cézanne Aix- Marseille 3 Jörg Guido Hülsmann, Directeur de thèse Université d’Angers Thorsten Polleit, Rapporteur Frankfurt School of Finance and Management Bruno Séjourné, Examinateur Université d’Angers Directeur de thèse : Jörg Guido HÜLSMANN Groupe de Recherche Angevine en Economie et Management (GRANEM) N° ED 20077353 ii CONTENTS LIST OF ABREVIATIONS.................................................................................................................................. IX LIST OF SYMBOLS ............................................................................................................................................ XI LIST OF FIGURES ............................................................................................................................................XIII LIST OF TABLES...............................................................................................................................................XV 1. INTRODUCTION............................................................................................................................................. 1 1.1 THE VEIL OF MONEY ON THE FINANCIAL MARKET ..................................................................................... 1 1.2 CAPITAL, INTEREST, AND THE FINANCIAL MARKET ................................................................................... 6 PART I: ACTION IN THE PASSING OF TIME............................................................... 15 2. THE LOGIC OF CHOICE VERSUS THE LOGIC OF ACTION............................................................. 17 2.1 METHODOLOGICAL INDIVIDUALISM......................................................................................................... 17 2.2 INTEREST THEORY AND COST THEORY ..................................................................................................... 20 3. THE TIME PREFERENCE THEORY OF INTEREST............................................................................. 23 3.1 ORIGINARY INTEREST................................................................................................................................ 23 3.2 TIME PREFERENCE AND THE LOGIC OF ACTION ....................................................................................... 25 4. ORIGINARY INTEREST AS VALUE-SPREAD BETWEEN MEANS AND ENDS .............................. 33 5. COSTS AND REVENUES ............................................................................................................................. 37 5.1 THE ECONOMIC ASPECTS OF ACTION IN THE PASSING OF TIME ............................................................... 37 5.2 OPPORTUNITY COSTS................................................................................................................................. 38 5.2.1 Opportunity costs as the conventional notion of costs...................................................................... 38 5.2.2 The position in time of the alternatives and the discounting process .............................................. 39 5.2.3 Opportunity cost – a matter of choice, not of action......................................................................... 41 5.3 COSTS AS CONSUMPTION SACRIFICE......................................................................................................... 43 5.3.1 The sacrifice of potential consumption............................................................................................. 43 5.3.2 The spread between costs and revenues............................................................................................ 46 5.3.3 Originary interest and the prices of the means of production.......................................................... 47 5.4 ORIGINARY INTEREST AND THE TIME SPAN BETWEEN COSTS AND REVENUES ........................................ 51 5.4.1 The passing of time............................................................................................................................ 51 5.4.2 The individual rate of originary interest ........................................................................................... 56 5.4.3 Coinciding means and ends............................................................................................................... 57 6. RELATIONSHIP TO OTHER THEORIES OF INTEREST..................................................................... 61 6.1 THE PRODUCTIVITY THEORY OF INTEREST .............................................................................................. 61 6.2 ORIGINARY INTEREST AS VALUE-SPREAD BETWEEN MEANS AND ENDS................................................... 65 6.3 THE TIME PREFERENCE THEORY OF INTEREST ........................................................................................ 66 6.4 GENERAL EQUILIBRIUM AND THE THEORY OF INTEREST......................................................................... 68 7. THE CONCEPTS OF SAVING, INVESTMENT, AND FINANCE .......................................................... 72 PART II: SOCIAL CAPITAL AND THE SUBSISTENCE FUND – FINANCE IN REAL TERMS........................................................................................................................ 77 8. THE IDEA OF FINANCING IN SOCIAL COOPERATION .................................................................... 79 8.1 INTERPERSONAL FINANCE ......................................................................................................................... 79 8.2 SOCIAL CAPITAL AND PRIVATE CAPITAL .................................................................................................. 80 8.3 THE CONFUSION OF SOCIAL AND PRIVATE CAPITAL IN MODERN ECONOMICS......................................... 83 8.4 SOCIAL CAPITAL AND THE SUBSISTENCE FUND THEORY .......................................................................... 89 9. THE SUBSISTENCE FUND THEORY........................................................................................................ 93 9.1 EXPOSITION OF THE CLASSICAL THEORY OF THE WAGES FUND .............................................................. 93 9.2 THE ECONOMIC ASPECTS OF HUMAN ACTION AND THE WAGES FUND ..................................................... 96 iii 9.3 THE USE OF THE TERM “CAPITAL” AS OPPOSED TO “WAGES FUND” ....................................................... 98 9.4 THE STAGES OF PRODUCTION.................................................................................................................. 102 9.5 FINANCIAL MARKET AS THE MARKET FOR THE SUBSISTENCE FUND...................................................... 106 9.6 THE LIMITS OF THE SOCIAL NOTION OF CAPITAL................................................................................... 109 10. CRITICISM PUT FORWARD AGAINST THE WAGES FUND THEORY AND ANTI-CRITIQUE ............................................................................................................................................................................ 112 10.1 THE AVERSION OF ECONOMISTS TO THE WAGES FUND THEORY.......................................................... 112 10.2 MONEY AND THE WAGES FUND –MILL’S RECANTATION ..................................................................... 117 10.3 DEMAND FOR COMMODITIES VS. DEMAND FOR LABOUR ...................................................................... 124 10.4 DISCOUNTED MARGINAL PRODUCTIVITY ............................................................................................ 128 10.5 THE SYNCHRONISATION OF PRODUCTION............................................................................................. 134 10.6 CONCLUDING REMARKS ON THE SUBSISTENCE FUND THEORY ............................................................ 139 PART III: PRIVATE CAPITAL AND THE FINANCIAL MARKET .......................... 141 11. THE ROLE OF MONEY ........................................................................................................................... 143 11.1 MONEY AND THE MARKET ECONOMY ................................................................................................... 143 11.2 THE BUSINESS SPHERE AND THE CONSUMPTION SPHERE ..................................................................... 145 12. ACTION IN THE BUSINESS SPHERE..................................................................................................