Fixed capital requires investment because it consists of long-term assets, like buildings, machinery, and equipment, that are essential for production. These assets are not immediately consumed but are used over several years, and their acquisition often involves significant upfront costs. To acquire and maintain these assets, businesses need to invest capital to ensure they have the necessary resources for ongoing operations and growth. But businesses do not always have that capital available up front. For this they turn to investors. When businesses lack the capital to invest in fixed assets upfront, they turn to investors or external financing sources, such as loans or equity funding. Investors provide the necessary capital in exchange for a return on investment, either through interest payments or ownership stakes. This allows businesses to acquire the fixed capital needed for growth and operations, without depleting their cash reserves. However, because the investors are interested in making interest on their loan, rather than profit from the production and sales of commodities created by the fixed capital they are investing in, the interests of the investors diverges a little bit from that of the commodity-producing capitalist. Investors who provide loans to businesses are primarily focused on earning a return through interest payments, not on the profits generated from the actual production or sale of commodities. This creates a potential conflict of interest. While commodity-producing capitalists (business owners) aim to maximize profit through efficient production and market sales, lenders or investors prioritize ensuring their loans are repaid with interest, often pushing businesses to focus on short-term cash flow and debt servicing. This can sometimes lead to tension, as the business might prioritize paying off interest over reinvesting in production or long-term growth, potentially affecting overall profitability and innovation. The servicing of this interest leads to the creation of an entire industry around finance itself, rather than commodity production. The need to service interest payments on loans leads to the growth of the financial industry, which becomes a key part of the economy, often outpacing the importance of actual commodity production. Financial institutions, like banks, investment firms, and hedge funds, specialize in managing and facilitating the flow of capital between lenders and borrowers. They create financial products (
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