Why Should There Be A Stock Market?

Discussion in 'Stock Market' started by shintao, Dec 29, 2010.

  1. shintao
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    shintao Take Down ~ Tap Out

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    Is there any part of the business cycle that requires a stock market?

    I ask because it does nothing for workers, and as far as I can see it does nothing for the economy. And a corproation should be borrowing from banks, which show consumers their credit is good. It tends to take money out of circulation, and steals corporate profits that should be going to workers to stimulate the economy.

    Does the stock market somehow benefit capitalism?

    Not looking for an argument here, just some thoughtful responses.
     
    Last edited: Dec 29, 2010
  2. Bern80
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    Bern80 Gold Member

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    A stock market is just that; A market. A centralized location for people to purchase various products. In this case shares of ownership in a company. That a centralized market place for doing that would eventually manifest is only logical. I guess I have to say the question doesn't make sense to me. Do you really mean to ask 'should businesses be allowed to sell partial ownership of their company as a means of raising capital?'

    Technically no, a business cycle doesn't require a stock market. Those of us interested in purchasing ownership in a company could do it the hard way. We could try to figure out somehow who owns how many shares of stocks, who's willing to sell them and for what and try and determine what the going rate for them ought to be.

    It benefits capitalism in the sense that the market for stocks is more efficient when everyone can see in one location what shares are trading at. And yes the ability to raise capital by selling ownership of a company does do something for workers. It allows them to keep their jobs. Businesses need capital to operate and selling ownership in the company in exchange for dividends or the potential for those pieces of ownership to be worth more than what you paid for them, is one way of generating capital.

    I don't see how a stock market steals from workers. Okay let's pretend there is no stock market. You would now contend that businesses have extra money to pay employees? No they wouldn't. The fact that they pay dividends to non-workers means those none workers gave the business money in the first place. Now that money given to the business in exchange for ownership is gone. The business generates more income through the sale of stocks than it pays out in dividends for thos stocks. Otherwise businesses wouldn't do it. Which means if you take away the ability to sell ownership in a company that company has LESS money to pay its workers.
     
    Last edited: Dec 29, 2010
  3. william the wie
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    william the wie Gold Member

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    The stock market is a feedback mechanism to identify profitable areas of investment. If you have a better one the whole world wants to know it.
     
  4. JBeukema
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    JBeukema BANNED

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    if you have to ask...
     
  5. Toro
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    Toro Diamond Member

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    Stock markets are vital to economic growth. They raise capital for corporations to invest and stock prices are signals on where to allocate capital in the economy.
     
  6. Mini 14
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    Mini 14 Senior Member

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    Communist countries don't have traditional stock markets.

    I wonder why?
     
  7. Willis
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    Willis Rookie

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    Yes the stock market is the major tool for capitalists to work with and they use it for their own good rather the good of the common employees.This system is ruining the world's economy but no one knows it.
     
  8. editec
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    editec Mr. Forgot-it-All

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    The stock market used to exist as a lamppost (or was it under a tree? I can't remember exactly) in lower manhattan where people hawked their shares.

    Obviously it served those people seeking to sell shares of their ventures and those seeking to purchase shares in businesses.

    The stock market in itself, actually serves labor in thew sense that it makes it possible for capital formation that will put labor to work.

    And while it is true that the market we have today has been manipulated often such that the working classes suffer, it's not the market, but the people in it who are responsible for that.
     
  9. Douger
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    [ame]http://www.youtube.com/watch?v=W1jhF7KlESE[/ame]
     
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  10. Bern80
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    Bern80 Gold Member

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    Didn't actually read my post or editec's.....did ya.
     

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