5.7 In an Objective Political Economy, capital is exclusively that of a commercial company.

1. Law and accounting describe the capital of a commercial company as "social".

On this point, as on many others, the Objective Political Economy follows the practice enforced by enterprise law and the standardization of corporate accounting. This usage applies to legally so-called civil enterprises.

2. A capital is divided into shares held by its shareholding or into shares subscribed by its member.

Shareholding would be, like the co-ownership of an enterprise in a general or limited partnership, eminently "capitalist". The cooperative or mutualist membership would be "solidarity". A cleavage is perpetuated without subjecting it to the verification of its economic reality.

3. Facts impose a starting point for this verification.

Any share is de facto a social share. Every shareholder is de facto a member. Let's first look at what is common to all shares of capital. Let us only then consider what makes the main economic difference between two kinds of share.

4. The exploited value of a share is equal to the division of the capital by the number of shares.¹¹⁷

The capital taken into account is increased by reserves, both mandatory and otherwise, and less any losses. The balance of unallocated earnings ("carry-forward") is therefore taken into account in the calculation of the exploited value per share. In contrast to the emission value, the exploited value varies over time.

5. Of the amount of capital used to calculate the exploited value per share, we say that it is the capital-operated.

In the case of enterprises whose shares are listed on the stock exchange, the market capitalization is likely to be more or less different from the capital under cultivation.

6. An increase in capital through the issuance of new co-ownership shares reduces the relative share, per share, of the enterprise and its earnings.

It therefore reduces the potential for tradable capital gains per share. These reductions are said to be dilution.

7. The acceptance of dilution promotes the deconcentration of corporate co-ownership.

It also promotes the increase in the capital base of the enterprises where it is practiced.

Notes

117. In Objective Political Economy (OPE), the exploited value per share (VEPA) is the standard book value per share — (shareholders’) equity divided by the number of shares — since proposition 6.6 states that a company’s capitaux propres and its capital exploité are the same object. The recognized Anglo-Saxon names are therefore adopted: book value per share (VEPA), dividend on equity, DOE (the annual dividend rate, TADD), and equity ratio (the capitalization rate, NTDC; nationally, the national average equity ratio, NAER). Equity is preferred to capital here precisely because, as OPE stresses, these funds belong to those who place them, not to the enterprise — which is what equity denotes. This equity is neither the bank-regulatory capital ratio nor capital employed (equity plus long-term debt, as in ROCE). OPE’s foundational capital — opposed to credit, and distinct from quasi-capital — is this permanent, risk-bearing equity. ↩