Capital Fictions

The occult world of high finance operates through a labyrinth of hedge funds, securities, bonds, and derivatives. It is camouflaged by mysterious acronyms and  remains largely hidden from view in the cavernous depths of often ostentatious office buildings. Central to this murky process of monetary make-believe is the circulation of fictitious capital. It is a term coined by Marx and elaborated by the economist David Harvey to describe forms of credit money with no tangible connection to material production.  It is an important concept, for when the circulation of fictitious capital spirals out of control, as it did in 2008, it can trigger full blown economic and social crises.[1] Brasil is on the verge of just such a precipice, gripped by a financial scandal that has undermined the legitimacy of both economic institutions and elected politicians. This time the villain of the piece is Daniel Vorcaro, head of the Master Bank. He is currently under arrest and the bank has collapsed with an estimated deficit of 80 billion Reais. Organised corruption and the accompanying theatre of loans, bribes, ‘gifts’, and favours is hardly unique to Brasil. However, even by international standards the extent of this latest controversy is so staggering that the Minister of the Economy, Fernando Haddad has called it the “biggest banking fraud in the history of the country.” It earns its elevated status  in the pantheon of banking crimes, not just because of the “misappropriation of funds, reckless management, excessive risk-taking, capital market fraud, and price manipulation,” but because its tentacles infiltrated all areas of the Republic.[2] It has implicated members of the Supreme Court, politicians from across the ideological spectrum, demoralised financial institutions, and caused lasting harm to over a million investors. One of the dangers is that with the looming national elections in September, the far-right will try to pin the blame on the governing Workers Party, despite the fact that the overwhelming majority of Banco Master’s fraudulent funds were managed by right wing governors and political organisations. At the time of his arrest trying to flee to Dubai, Vorcaro owned four private jets, several yachts, beachside mansions and a real estate empire worth hundreds of millions. 

[1] For an essay on the relationship between the built environment and crisis, see my essay The Shadow of Economic History: The architecture of boom, slump and crisis in Charley, J, Memories of Cities: Trips and Manifestoes Ashgate ; London, 2013) and an earlier version in the ARQ - Architectural Research Quarterly, (Cambridge University Press, 2011)

[2] For an extended essay on the scandal see, Dieguez, A Contaminação: O banco Master e a desmoralização da Republica (Piauí, No 223, Fevereiro, 2026)