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This makes sense. If both parties benefit then we should start an economy that consists of only a stock market. Get rid of farmers, factories and other products

This makes sense. If both parties benefit then we should start an economy that consists of only a stock market. Get rid of farmers, factories and other products. Just have this market of people trading certificates representing Corporations. According to your logic every time a transaction happens both parties benefit and the economy grows! Thus we can continuously grow an economy just by trading paper! Obviously this doesn't make sense.... Utility and value is not a concept that is solely tied to human opinion or imagination. It is not just your opinion that shapes the value of something... your opinion does not change the fact that you need food to survive, try as hard as you might to change your opinion on the value of food, you cannot reduce the utility of food to zero, you cannot change the fact that it is required sustenance for us to survive... Value and utility are intrinsically tied to physical matter and physical energy, it is less abstract than you think. All things of value and all things that have utility are actually things with reduced entropy. I can't say that all things of reduced entropy have value, but all things of value absolutely have reduced entropy. Reduced entropy can be exchanged, moved and created when you input more energy into the system. It is also constantly running out. Because of this it is by far better to think of value and utility from a natural resource perspective, the same way we view energy oil and mined products.

skookumchuck 8y ago
> According to your logic every time a transaction happens both parties benefit and the economy grows! That's actually correct. The stock market is a mechanism for investment to be transferred from less productive uses to more productive uses. > Get rid of farmers, factories and other products. That doesn't follow. Just because wheels are very useful, doesn't mean wheels are the only thing that need be produced. > Value and utility are intrinsically tied to physical matter and physical energy, No, they are not. Ideas and execution have value, too. That's why, for example, libraries have value - in the form of the information in the books, not the physical manifestation of the books.
- crimsonalucard 8y ago
  >That's actually correct. The stock market is a mechanism for investment to be transferred from less productive uses to more productive use No it is not. Imagine a stock market consisting of two people and a single certificate representing a corporation. Now imagine both people constantly trying to sell to each other that certificate at a higher price and buy the certificate at a lower price. This is essentially a scaled down version of the stock market. Nothing of value is created, only a game is played similar to gambling. You can scale this example up to thousands of companies each divided up into shares with thousands of people making transactions, the principle is the same. The act of a transaction is just paper and money being traded. Without farms, food and factories no utility producing action is happening. Issuing stocks can generate utility, but trading stocks generates nothing because you are trading paper. >That doesn't follow. Just because wheels are very useful, doesn't mean wheels are the only thing that need be produced. It does follow. You can have an economy of farmers, factories and other products WITHOUT stocks. Because these things are the primary drivers of an economy. You cannot have an economy of just a stock market without physical goods because the stock market is just an abstraction on top of what is essentially the true nature of an economy: the exchanging of products with utility. A stock certificate only represents utility. >No, they are not. Ideas and execution have value, too. That's why, for example, libraries have value - in the form of the information in the books, not the physical manifestation of the books. What does it take to form an idea? You need to feed yourself food to sustain yourself, you need energy from the physical world to formulate the idea. And it doesn't stop there, an idea by itself has no utility until it is deployed into the physical realm as a physical product or service. The formation of an idea up to it's crystallization into the physical world involve the injection of energy. THe process from beginning to end involves the reversal of entropy. The ideas in a library took energy to form. Additionally even the storage of those ideas require physical tomes in order to be set in stone. An idea, like utility is not as ephemeral as you think. All ideas take physical space to store whether it be on a hard drive, your brain, or the pages of a book.
  - skookumchuck 8y ago
    I'm curious how you came by these theories. Did you learn them in school, from a book, or did you come up with them yourself? If it's a school or a book, can you please point them out?
- EliRivers 8y ago
  The stock market is a mechanism for investment to be transferred from less productive uses to more productive uses. Maybe the initial sale was, when the company gained new money in order to put it to productive use. After that, it's just people swapping that stock amongst themselves. No money going into productive use.
  - skookumchuck 8y ago
    If that were true, then the corporation would cease to care a fig about the stock value after the IPO. But they do, very much. Shall I count the ways? 1. Much employee compensation is in the form of stock, not cash. This essentially puts that cash in the corporation's pocket. 2. Corporations often issue more shares, which brings cash onto the books. 3. Corporations buy other corporations using their stock. The value of the stock sets the price. 4. Corporations own stock in themselves, and this stock can be used as collateral for loans. 5. A rising stock price creates a lot of intangible value, such as the ability to attract top talent. Everyone wants to be associated with a winner, not a loser. 6. Etc.
    - EliRivers 8y ago
      Much employee compensation is in the form of stock That's just transfer of stock from the company again. Corporations often issue more shares, which brings cash onto the books. That's just transfer of stock from the company again. Corporations buy other corporations using their stock. That's just transfer of stock from the company again. Etc. If the company can give someone stock and get money (or by doing so not lose money), that's money going into more productive use. The rest is people swapping it around themselves; not fresh money going into more productive use. It seems from your arguments that companies care about their stock price going up because they have stock. They have stock and they want the initial influx of cash, when they offload it, to be as high as possible. Your arguments seem to support mine.
      - skookumchuck 8y ago
        I pointed out 5 ways that a rising stock price puts cash in the pockets of a corporation. BTW, if you know of an econ book that espouses your theories, I'd like to read it.

skookumchuck 8y ago

> According to your logic every time a transaction happens both parties benefit and the economy grows! That's actually correct. The stock market is a mechanism for investment to be transferred from less productive uses to more productive uses. > Get rid of farmers, factories and other products. That doesn't follow. Just because wheels are very useful, doesn't mean wheels are the only thing that need be produced. > Value and utility are intrinsically tied to physical matter and physical energy, No, they are not. Ideas and execution have value, too. That's why, for example, libraries have value - in the form of the information in the books, not the physical manifestation of the books.

crimsonalucard 8y ago
>That's actually correct. The stock market is a mechanism for investment to be transferred from less productive uses to more productive use No it is not. Imagine a stock market consisting of two people and a single certificate representing a corporation. Now imagine both people constantly trying to sell to each other that certificate at a higher price and buy the certificate at a lower price. This is essentially a scaled down version of the stock market. Nothing of value is created, only a game is played similar to gambling. You can scale this example up to thousands of companies each divided up into shares with thousands of people making transactions, the principle is the same. The act of a transaction is just paper and money being traded. Without farms, food and factories no utility producing action is happening. Issuing stocks can generate utility, but trading stocks generates nothing because you are trading paper. >That doesn't follow. Just because wheels are very useful, doesn't mean wheels are the only thing that need be produced. It does follow. You can have an economy of farmers, factories and other products WITHOUT stocks. Because these things are the primary drivers of an economy. You cannot have an economy of just a stock market without physical goods because the stock market is just an abstraction on top of what is essentially the true nature of an economy: the exchanging of products with utility. A stock certificate only represents utility. >No, they are not. Ideas and execution have value, too. That's why, for example, libraries have value - in the form of the information in the books, not the physical manifestation of the books. What does it take to form an idea? You need to feed yourself food to sustain yourself, you need energy from the physical world to formulate the idea. And it doesn't stop there, an idea by itself has no utility until it is deployed into the physical realm as a physical product or service. The formation of an idea up to it's crystallization into the physical world involve the injection of energy. THe process from beginning to end involves the reversal of entropy. The ideas in a library took energy to form. Additionally even the storage of those ideas require physical tomes in order to be set in stone. An idea, like utility is not as ephemeral as you think. All ideas take physical space to store whether it be on a hard drive, your brain, or the pages of a book.
- skookumchuck 8y ago
  I'm curious how you came by these theories. Did you learn them in school, from a book, or did you come up with them yourself? If it's a school or a book, can you please point them out?
EliRivers 8y ago
The stock market is a mechanism for investment to be transferred from less productive uses to more productive uses. Maybe the initial sale was, when the company gained new money in order to put it to productive use. After that, it's just people swapping that stock amongst themselves. No money going into productive use.
- skookumchuck 8y ago
  If that were true, then the corporation would cease to care a fig about the stock value after the IPO. But they do, very much. Shall I count the ways? 1. Much employee compensation is in the form of stock, not cash. This essentially puts that cash in the corporation's pocket. 2. Corporations often issue more shares, which brings cash onto the books. 3. Corporations buy other corporations using their stock. The value of the stock sets the price. 4. Corporations own stock in themselves, and this stock can be used as collateral for loans. 5. A rising stock price creates a lot of intangible value, such as the ability to attract top talent. Everyone wants to be associated with a winner, not a loser. 6. Etc.
  - EliRivers 8y ago
    Much employee compensation is in the form of stock That's just transfer of stock from the company again. Corporations often issue more shares, which brings cash onto the books. That's just transfer of stock from the company again. Corporations buy other corporations using their stock. That's just transfer of stock from the company again. Etc. If the company can give someone stock and get money (or by doing so not lose money), that's money going into more productive use. The rest is people swapping it around themselves; not fresh money going into more productive use. It seems from your arguments that companies care about their stock price going up because they have stock. They have stock and they want the initial influx of cash, when they offload it, to be as high as possible. Your arguments seem to support mine.
    - skookumchuck 8y ago
      I pointed out 5 ways that a rising stock price puts cash in the pockets of a corporation. BTW, if you know of an econ book that espouses your theories, I'd like to read it.