Abstract:

The definition of fictitious economy is now quite contused m our academic circles because of different judgement criteria. The determination of the fictitious economy connotation should start from Karl Marx's definition of fictitious capital. The development of fictitious economy may be divided into two stages. The first stage was from the 17^th century to 1960s; in a narrow sense the fictitious economy was in its embryonic state, and in a broad sense it displayed its certain periodicity. The second is the age of financial globalization, which began after the collapse of the Bretton Woods System in 1970s. The fictitious economy in its true sense has expanded at a high speed and presents some structural features. Viewed from the angle of relations between securities exchanges, investment funds (such as mutual funds and pension funds) and financial derivatives markets with real economy, fictitious economy produces its positive and negative dual effects on real economy. Meanwhile, it promotes the social economic welfare on the one hand and reduces the social economic welfare through its influence on the direction of social investment and the structure of income distribution on the other.

Key words: fictitious capital, fictitious economy, real economy, social economic welfare