Posted: May 12, 2019 5:34 pm
by Thommo
Svartalf wrote:in a properly regulated state of finances, it should be... there's only one maker of money, and others should not be able to make their own, especially ot buy high (and hopefully resell even higher as I doubt it's to actually invest in the company for the long term) ...


I don't think this is right. If a business starts up and invests in R&D that develops a new technology (for example any of the advances in farm machinery, pesticides, crop strains or fertiliser that took place in the 20th century), then wealth has been created, a new way of doing things has been created, the world has changed. But in order to do this you need money up front, capital.

The people who buy the shares are the ones with capital invested in the company, they get a share of the profits in exchange for that ownership, and additionally they assume the risk of the company becoming worth less than it currently is, or the beneficial prospects of the company becoming worth more than it currently is (because its sales rise, because its portfolio of brands and IPs becomes more valuable etc.).

Since there is not only one such company and each is the combined effort of dozens or thousands of individuals it cannot be that there's only one maker of money (in any relevant sense). There are conjectures about alternative ways of raising capital, that a system could, in theory function, entirely through central planning (or no planning at all) and that banning the investing of private capital could work. Nobody has ever made it work though, indeed attempts that have been made have only resulted in worse economic outcomes thusfar.

And then there's the whole concept of retail. If I buy an apple from the supermarket, they've done a service for me, because I can buy my cereal, milk, bread and everything else I want at the same time. It's a huge time, effort and cost saver that I could not get if I went straight to the orchard. They too have created value for me that outweighs the additional cost they might charge compared to buying wholesale.

Much like gambling, speculation can be avoided by the ordinary person. Almost to exclusion the only winners and losers in speculation are those who speculate. On average investors (which overlaps with the category of speculators) in the stock market have tended to make significant gains over the last century or so though, unlike gamblers.*

Please note, none of this excuses the lack of proper regulation that has also frequently accompanied 20th century capitalism, which from time to time has shown its "unacceptable face". Whether that be price gouging, raiding, monopolising or anything else (simple examples might include Fixed Odds Betting Terminals that pray on the addicted, or predatory acquisition of pharmaceutical patents that allow for extreme price gouging in the regions of price hikes of 2000%).

*All that said, if my pension or any of my share holdings were invested in utilities in the UK right now, I'd be getting out PDQ.