What is Mercenary Capital?

Mercenary capital refers to investment capital that is motivated solely by financial gain and is indifferent to the social or environmental impact of the projects in which it is invested. It is capital that is willing to invest in any business opportunity, regardless of its ethical or moral implications, as long as it generates a profit.

Mercenary capital operates without regard to the long-term consequences of its actions and is focused solely on maximizing short-term profits. This type of capital is often criticized for contributing to environmental degradation, human rights violations, and other negative social outcomes. It can also exacerbate economic inequality, as investment capital is directed toward businesses and industries that prioritize profit over all else, often at the expense of the environment and local communities.

In contrast, socially responsible investing and impact investing seek to align investments with an individual or organization's values and have a positive impact on society and the environment. These types of investments focus on considering the social and environmental impact of the projects in which they invest and strive to create positive change.

Mercenary capital is often associated with a "bottom line" mentality, in which financial gain is the primary consideration, and all other factors are secondary. This approach can result in negative consequences for both the environment and society, and is often criticized as being unsustainable and lacking accountability.

Simplified Example

Mercenary capital can be compared to hiring a superhero for a day. Just like a superhero is hired to solve a problem or protect people, mercenary capital is hired to make money.

For example, if a company wants to build a big tower, they might hire a superhero construction worker to come and help build it faster and stronger than regular construction workers. In this analogy, the construction worker is like mercenary capital. The company pays them to come and do a special job, and in return, they hope to get a big payoff.

Similarly, mercenary capital is hired by companies and individuals to help them make more money. They might use special strategies and techniques to invest their money and make a profit. Just like a superhero, mercenary capital can be very powerful, but it can also be risky. If things don't go as planned, the person who hired them might not make as much money as they hoped.

History of the Term "Mercenary Capital"

The term "mercenary capital" is thought to have originated in the early 2000s, aligning with the ascent of hedge funds and private equity firms. Its prominence in the financial lexicon heightened during the 2008 financial crisis, a period when hedge funds faced scrutiny for allegedly contributing to the crisis through their assertive short-selling strategies.

Examples

Private Military Contractors (PMCs): These are companies that provide military and security services to governments and corporations. They are paid to carry out tasks that are typically performed by military or police forces, such as security, training, and support. Examples of PMCs include Blackwater, DynCorp, and G4S.

Hedge Funds: Hedge funds are investment funds that employ speculative strategies to generate high returns for their investors. They are known for their aggressive investment styles and are often criticized for their role in destabilizing financial markets. Examples of hedge funds include Bridgewater Associates, Renaissance Technologies, and Citadel LLC.

Venture Capital Firms: Venture capital firms invest in start-up companies in exchange for equity ownership. They provide funding and support in exchange for the potential for high returns on investment. Venture capital firms typically focus on high-growth industries, such as technology and biotechnology, and are known for their high-risk, high-reward investment strategies. Examples of venture capital firms include Sequoia Capital, Andreessen Horowitz, and Accel Partners.

Related Terms

• Capital: A way to describe the money and other resources that people and businesses use to make things happen.

• Capital Fund: A big piggy bank where people or organizations put money together to use for a specific purpose.