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**The Capitalist Degree of Immortality**

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**Shimshon Bichler and Jonathan Nitzan **[1]

Jerusalem and Montreal, December 2021

bnarchives.net / Creative Commons (CC BY-NC-ND 4.0)

**Immortality**

This note offers some speculative ideas worth considering. One of the key features of all hierarchical civilizations is their rulers’ fear of death. This fear was famously narrated in the ancient myth of Gilgamesh – the Sumerian king who realized that, like all other humans, he too was destined to die and embarked on a desperate quest to annul his mortality (Mitchell 2004; Kramer 1956). According to Lewis Mumford (1967, 1970), this quest for immortality is the main reason why society’s rulers are forever obsessed with building and fortifying power hierarchies – or ‘megamachines’, as he called them. Controlling these megamachines, Mumford argued, is the rulers’ way of playing God, a futile yet all-possessive effort to conquer the future and live forever.

**Capitalist Immortality**

In capitalism, the rulers finally
figured out how to do it – sort of. Like their predecessors, capitalists too
are obsessed with their mortality, and they too build hierarchical megamachines
– the most powerful ever – to quell this obsession. But their megamachines are
fundamentally different. Unlike prior versions, theirs are governed by a
single, universal ritual – capitalization – and this ritual focuses explicitly
and solely on the future. Technically, capitalization pretends to *compress
the entire future to the here-and-now*: it encourages owners to bring – or
‘discount’, in their lingo – everything in the future that affects earnings
back to the current moment; it allows them to give the result a definitive
dollar quantity; and its permits them to label the outcome ‘present value’.

No previous mode of power came even
close to this majestic achievement. In the past, most promises to pay were postponed
to the afterlife, sans guarantee. Not so in capitalism. The future remains
unknowable, of course, but in capitalism the rulers bypass this hassle by
pretending to predict what lies ahead with statistical measures of certainty.
This pretention makes the future, for the first time ever, appear* wholly
ownable*. Nowadays, capitalists don’t have to wait for the uncertain
afterlife or Karma-like incarnation to reap their promised gains. They already
own all these gains here and now, quantified in the universally discounted
units of market capitalization. And because for capitalists, ownership life, the fact that
they own the entire future of earnings – including the earnings of their
assets’ subsequent owners – makes them* *immortal *right now*. This
self-deceptive ploy must be the most glorious, effective and all-encompassing
con job ever.

**The Capitalist Degree of Immortality**

As with all con jobs, though, this
one too comes with tricky fine prints. In order to capitalize the future, you
must first know it, and as we all know, the future is unknowable, even to
know-all capitalists. Moreover, the future is very long, some say infinite. And
since, as finance guru Benjamin Graham dictates, capitalization should discount
the future ‘all the way to eternity’ (quoted in Zweig 2009: 28), it is impossible for anyone –
capitalists included – to see it all. In this sense, no one, not even the most
farsighted capitalist, can ever be *fully* immortal.

Instead, each capitalist has his or her own ‘degree of immortality’, depending on how far they can look ahead. All else remaining the same, those who see farther achieve greater immortality, whereas those whose vision is more impaired must settle for less. In capitalism, even eternal life is differential.

The degree of immortality is easy to
measure, at least in principle. In finance, the ‘true value’ of an asset is
defined as the discounted, or present value of its future earnings. [2] If these earnings are known, ‘true
value’ at any time *t* is given by their capitalization *K _{t}*
as shown in Equation 1:

where is the earnings in period
*t+i*, for any *i=*1 to *n*, and *r *is the discount rate
at time *t*.

In practice, this equation can look
messy, since it requires specifying the earnings received in each and every
period. We can make it neater, though, by starting from the current level of
earning and finding the
compounded earning growth rate *g* that will yield the same capitalization
given by Equation 1, such that:

Finally, if the earnings being
capitalized continue to flow indefinitely, and if (*r > g*),
Equation 2 becomes even simpler:

And that’s all we need for our
calculations. Capitalists can achieve immortality here and now only by
accurately discounting *all* their future earnings. And if earnings
continue to flow forever, they need to use Equation 3 to capitalize them.
Actual capitalists, though, can see only part of the future, which means that
even if their partial projections are accurate, they can use only the less
accurate Equation 2 (which covers only the *n *periods they can
predict), instead of Equation 3 (which requires knowing all earnings to
infinity).

Expressing the partial capitalization
of Equation 2 as a per cent of the full capitalization of Equation 3 yields the
proportion of the asset’s ‘true value’ covered by the computations of our
flesh-and-blood capitalist. This proportion, which ranges from 0 to 100, is the
capitalist’s ‘degree of immortality’ at time *t*:

**Simulation**

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This isn’t the end of the story,
though. As it turns out, the proportion of the asset’s ‘true value’ discounted
by the capitalist – and therefore the capitalist’s degree of immortality –
depends not only on the number of earning periods *n* included in the capitalist’s
computation, but also on the difference between the discount and the earnings
growth rates (*r* - *g*). In general, the degree of immortality grows
with *r* and declines with *g*, so it rises/falls together with the
magnitude of (*r* - *g*).

These relationships are shown in
Figure 1 (where, as before, we assume that the capitalist’s earning predictions
are correct). The horizontal axis shows the number of years *n* whose
earnings are being capitalized (the graph caps them at 200, but this number can
be made as big as we want). The vertical axis shows the degree of immortality
given by the share of ‘true value’ accounted for by the capitalist’s partial
computations (0‑100%). The figure shows six curves, representing
different values of (*r* - *g*) ranging from a low of 0.5% to a high
of 5%.

All curves rise from left to right:
in other words, for any given (*r* - *g*), the greater the included
number of earning years, the more accurate the capitalized value of the asset
relative to its ‘true value’, and therefore the greater the owner’s degree of
immortality. But this degree changes with the magnitude of (*r* - *g*).
When the discount rate *r* is significantly bigger than the compounded
growth rate of earnings *g* – for example, when the difference between
them is 5% as shown by the top curve – the relative importance of earnings
received in the deep future drops perceptibly. Conversely, when the difference
between the two rates is small – for instance, 0.5%, as shown by the bottom
curve – the relative importance of earnings received in the deep future drops
more slowly.

The impact of (*r* - *g*)
on the degree of immortality is summarized in Table 1. The table shows that
when (*r* - *g*) = 0.5%, capitalists, even if
perfectly prescient, still need 339 years of earning data to have their
capitalization reach 80% of ‘true value’ and 485 years to reach 90%. By
contrast, when (*r* - *g*) = 5%, these same
capitalists need only 35 years of data to reach 80% of their asset’s ‘true
value’ and 50 to reach 90%.

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**Bottom Line**

Over the past 150 years, S&P 500
earnings per share have grown by a compounded average rate of 4%, while their
corresponding discount rate was perhaps twice as high, at 8%. If these rates
represent future earnings growth and the rate at which they are being discounted,
respectively, they put the (*r* - *g*) difference at roughly 4%. With
this difference, modern capitalists can achieve 80% immortality with only 44
correctly predicted years of earnings and 90% with a mere 62! A somewhat higher
earnings growth and/or lower discount rate would require immortality-hungry
capitalists to peer deeper into the future for the same percentages – but even
here they could still achieve 80‑90% immortality with roughly a century
worth of data, give or take.

Bottom line: eternity has been democratized. It is no longer limited to the hallucinations of Pharaohs, megalomaniac tyrants and mausoleum-bound dictators. Nowadays, all capitalists, actual and aspiring, can get close to it – or so they feel. It is true that dominant capitalists, by virtue of their farther foresight and power to creorder the future, continue to lead the delusional pack. But even retail, mom-and-pop investors can get a little taste of immortality.

No wonder so many people swear allegiance to capitalism. Although the capitalist mode of power often undermines their material interests and hijacks their mind, spirit and autonomy, it gives them a whiff of eternity here and now – and who can resist this quest of Gilgamesh?

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**Endnotes**

[1] Shimshon Bichler and Jonathan Nitzan teach political economy at
colleges and universities in Israel and Canada, respectively. All their
publications are available for free on *The Bichler & Nitzan Archives*
(http://bnarchives.net). Work on this research note was partly supported by SSHRC.

[2] To be clear, ‘true value’ has nothing to do with truth. It’s simply a convention. This convention, which first emerged in the bourgs of the late Middle Ages, evolved in the twentieth century into a religious-like ritual. Nowadays, this ritual has billions of followers – practically everyone in capitalism is compelled to accept it – but followers, no matter how numerous, are hardly a yardstick for truth (for a detailed analysis, see Nitzan and Bichler 2009: Part III).

**References**

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Kramer, Samuel Noah.
1956. [1981]. *History Begins at Sumer. Thirty-Nine Firsts in Man's Recorded
History*. 3rd rev. ed*.* Philadelphia: University of Pennsylvania
Press.

Mitchell, Stephen. 2004. *Gilgamesh.
A New English Version.* New York: Free Press.

Mumford, Lewis. 1967. *The Myth of
the Machine. Technics and Human Development.* New York: Harcourt, Brace
& World, Inc.

Mumford, Lewis. 1970. *The Myth of
the Machine. The Pentagon of Power.* New York: Harcourt, Brace Jovanovich,
Inc.

Nitzan, Jonathan, and Shimshon Bichler.
2009. *Capital as Power. A Study of Order and Creorder*. RIPE Series in
Global Political Economy*.* New York and London: Routledge.

Zweig, Jason. 2009. Be Inversely
Emotional, Not Unemotional. *The Wall Street Journal*, May 26, pp. 28.