I’m looking for your deepest abstracted definition of the history and political nuance, the philosophical, the ethics, the evolved and historical meaning, and the meaningful impact it has had in evolving political structures and systems.
This is not ELI5, or a dumb question like “What is the stock market,” /s… It is a question of dumb contexts like: what is it really under the surface, or what is it in your opinion, or what is it in principal, or what is it used for as a justification for other parts of society?
I’ll take a shot from the hip at this question, but note that I won’t add my customary citations or links.
The stock market is the paragon of property and trusts, contracts, corporations and law, and the capitalist socio-economic system. The very existence of the stock market implies a society that has some or most of these concepts.
For example, for shares to be traded, there generally must exist ownership rights upon the shares, distinct from the ownership rights that the company has of its own property. Or if not outright ownership of a share, then the benefit that a share provides (eg dividends). It also implies a legal system that will enforce these rights and the obligations of the company to its shareholders.
For a tradable company to exist, it must be organized/chartered as an entity distinct from any single person. This is different than the feudal days, when ventures would be undertaken “in right of the King” or some member of the nobility. The feudal method wouldn’t work for modern companies, or else the King/Duke/Count/whatever could stiff the shareholders by just taking all the earnings. The company still needs to be created by legal means, either an Act of Parliament/Congress, by letter patent from the Monarch, or the modern administrative method of applying to the state Secretary of State (USA) or Companies House (UK) as examples.
Even the structure of a for-profit tradeable company – when compared to a state-owned enterprise, a non-profit, a co-op, or an NGO or QUANGO – is a representation of the values inherent to capitalism. A company is obliged to use the shareholders’ funds – which is held by the company but is owed to the shareholders – to extract the greatest return. But this can come in many forms.
Short-term value from buying investments and quickly flipping them (eg corporate home buyers) is different than rent-seeking (eg corporate landlords) and is still different than long-term investments that actively work to build up the value (eg startup incubators, private wealth funds, Islamic banking, transit-owned adjacent property). If a for-profit company doesn’t have a plan to extract a return… they’re in hot water with the shareholders, with penalties like personal liability for malfeasance.
Another way of looking at the stock market is that if you have all the underlying components but don’t yet have a stock market, it would soon appear naturally. That is to say, if the public stock markets were banned overnight, shares would still trade but just under the table and without regulation. But if any critical part underpinning the markets stopped existing, then the market itself would collapse.
History shows numerous examples where breakdowns of the legal system resulted in market mayhem, or when corporate property is expropriated for the Monarch’s wars or personal use, or when funds invested into or paid out of companies is hampered by terrible monetary inflation.
As for what the stock market does, its greatest purpose is to organize investments into ventures. Historically, ventures were things like building a ship to sail to the New World and
stealobtain goods to sell at home. Merchant ships were and are still very expensive, so few singular persons could afford it. And even if the could, the failure of the venture could be catastrophic for that person’s finances. Better to spread the risk and the reward amongst lots of people.What was once the sole domain of the landed gentry and nobility, slowly opened to the nouveau riche during the Industrial Revolution(s), then in turn to everyday people… for better or worse. It’s now almost trivial to buy a share in any particular listed company, but just opening the stock market to everyone would have been chaotic at best. I think it’s NYSE that still has on-floor traders/brokers, but imagine if all shares in that market had to be traded in a single room, with no digital trading. It’s already quite lively on the trading floor today, now add all the trades from middle class Americans on payday. It would become physically impossible.
Likewise, a pure capitalist stock market would permit awful things like bribing journalists to write fake stories to crash a stock, then buy it for cheap. Or pump and dump scams. And would have no “circuit breakers” that halt a share during so-called flash crashes.
I’m reminded of a scene from the ITV show Agatha Christie’s Poirot in the episode “Appointment With Death”, where a wealthy woman is not only murdered but her business empire collapses because the murderer also spooks the markets as a double whammy, causing investors to panic and sell up. The relevant implications here is that despite her company not having changed its financial picture, it got cut up for scrap and thus lost most of its value, rendering the business worthless in the end. Companies are usually valued more as a going-concern, above what all its property put together would amount to. Where does that additional value come from? It’s the prospect of a return from this particular assemblage of resources.
Suffice it to say, the stock market is a lot of things. But I view it as a natural result of certain other prerequisites, meaning we can’t really get rid of it, so instead it should be appropriately regulated.
So what of the stock market during WW1/2, or its relevance to the USSR? What about enterprise outside of the Western world in South America, Africa, and Asia by comparison. I’m quite naive on this subject. I figured it all started with dutch merchant shipping, but upon looking up the wiki, the first mentioned source was 12th century France.
I’m not really seeing the difference in feudalism except a members only kind of participation with a crony pool of inbreds, not all that different than the billionaires of today.
What are the idealist or futurist potential alternatives between the present and a future where wealth is no longer the primary means of complex social hierarchical display? My premise is that basing hierarchical display on the fundamental means of human survival is barbaric primitivism. I believe we already have systems of merit, reputation, and accolades that serve as prototypes in academia, sports, and entertainment. Wealth extraction neglects the responsibility of the environment and long term planning. I’m curious how humanity evolves in a distant post scarcity future but without becoming authoritarian or utopian/dystopian, but instead realistic, if you have any thoughts.
For the historical questions, I don’t really have answers, especially where it involves departures from the Western world. I did, however, briefly touch up on Islamic banking, which I’ve always found intriguing as the Islamic faith does not permit charging interest on loans, viewing it as usurious. I’m informed that Christianity also had a similar prohibition on usury, but apparently it fell due to the need to fund the constant wars in Europe.
I think the important distinction insofar as stock markets is that the crony pool of inbreds have access, but so too does the commoner. Well, the middle-class commoner usually. And we’ve seen David-vs-Goliath cases where the commoners put up a decent fight against the inbreds’ institutions; the whole GameStonk fiasco comes to mind. An equivalent economic upset would have been wholly impossible at any point during any feudal period in history.
From conversations I’ve had previously, possible answers to that question are presented in the works of Paul Cockshott, author of Towards A New Socialism. I’ve not read it, but friends in Marxist-Leninist parties have mentioned it. The Wikipedia page, however, notes that it’s an economics book, which could be fairly technical and difficult to read. Sort of like how Das Kapital is more-or-less a textbook, in contrast with how Wage Labour And Capital was meant for mass consumption.
True. The cost to the environment is not “internalized”, to use the technical term. Hence, it doesn’t need to be paid for, and is thus “free real estate”. Solutions to internalize environmental harm include carbon taxes or cap-and-trade. But the latter is a lukewarm carbon tax because it only looks at the end-result emissions, rather than taxing at the oil well, so to speak.
Might I recommend The Three-Body Problem and the trilogy overall by Liu Cixin? This phenomenal hard scifi work describes a space-faring future where the human species faces a common, external threat. After all, much of today’s progress was yesterday’s scifi. So why not look to scifi to see what tomorrow’s solutions might be. It’s no worse than my crystal ball, which is foggy and in need of repair.