Equity

Share capital arose as a result of the overgrowth of the productive forces of the narrow boundaries of individual capital, which contributed to the development of the technological method of production, became an important means of improving the economic mechanism.

Shares and bonds are not real capital, but only the title of property, which brings income to the owners of fictitious capital, which carries out its circulation largely regardless of the movement of real productive capital. Fictitious capital is much larger than real. This deviation is explained primarily by the fact that in a period of favorable economic conditions, the share price is much higher than the nominal value, as well as the downward trend in the average interest rate.

Authorized capital in terms of material content consists of means of production (machinery, equipment, buildings, roads, raw materials, etc.). From the point of view of value relations, share capital is stocks, bonds, and cash.

Share capital in terms of material content consists of means of production (machinery, equipment, buildings, roads, raw materials, etc.). From the point of view of value relations, share capital is stocks, bonds, and cash.

The share form of capital allows for additional enrichment through the appropriation of founding profit. Along with small shareholders (General Motors, for example, has up to 1.5 million with a total share value of over 600 million), the buyers of shares are. banks, insurance companies, pension funds and other collective shareholders.

Share capital is divided into equity and borrowed. Equity consists of funds received from the issue and sale of shares, and reserve capital (deductions from profits and their investment in production). Reserve capital is also used to pay dividends during a period of deteriorating economic conditions. Borrowed capital is a bank loan and funds from the issue and sale of bonds.