Abstract
Capital gains occupy an uneasy place in the literature of economics. They are a dominant goal of investor activity, and their pursuit is often said to add to efficiency by stimulating high levels of effort and creativity. Traditionally, capital gains have been lightly taxed in many countries in order to encour? age their supposed contributions to efficiency and progress. Yet, I will indicate that these economic contributions are mainly imagi? nary, rather than real. Capital gains are instead merely economic rent, obtained as windfall gains in the course of speculation in portfolio securities, land and resources. As this paper explores, the process of speculation creates little economic value, while it absorbs substantial volumes of resources.
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