Then again, I can't fathom what people would be doing with their money if the stock market weren't there. I imagine they might naturally wind up with some sort of...stock market.
Capitalism is defined by having the capitalist, who provides capital, and without the ability to sell their share of stock it's difficult to see what the value would be. So you kind of require stock markets.
Edit: which is why it's odd to call China communist. They have 3 stock exchanges. They're really a capitalist single-party state.
The stockmarket enables that by making takeovers easier as you have a higher proportion of short termist shareholders who 1) fail to block value destroying acquisitions on one side and 2) jump at the chance to make a quick profit on the other.
It helps as it is both a gauge of the success of the strategy, and also a lever where the process can be fine tuned, eg. slowly buying stock then strategically dumping in the right time, correlated with other external shocks can have wider effect to whole industries through controlling the public opinion on specific industries.
But would only happen if USA decided to totally financialize all sectors of its economy and make a small set of oligarchic corporations THE load-bearing element of its strategic capacity, leading us to chase market returns even if those returns totally kneecapped our ability to build anything at all of actual value.
Good thing we haven't done that!
In the U.S. we have mistaken Capitalism for a religion, and so it wags the dog, so to speak. Since our founding we have made some attempts at finding a balance between our use of the tools of Capitalism and socialism (in more the Democratic Socialism style, rather than the Communism style), and we had a good run in the decades after WWII. But starting with McCarthyism, and really picking up under Regan we have prided ourselves on adopting Capitalism as a religion, and it really shows up in both the income inequality as well as the increasing role of (and corrupting influence of) money in our politics/government.
"The term “free market capitalism” refers to an economy that puts no or minimal barriers in the way of privately owned businesses. Matters such as worker rights, environmental protection, and product safety will be addressed by businesses as the marketplace demands."
it's basically worship of owning the means of production and not being regulated in its use, e.g. if you own a company you get to dictate all sorts of unreasonable things to your employees, and any benefits gained from automation accrue to whoever can afford the up front money to own the machines.
Any empirical support for that?
There are better definitions on both wikipedia and Britannica:
https://en.wikipedia.org/wiki/Free_market_capitalism
https://www.britannica.com/money/free-market
Especially this hit:
https://en.wikipedia.org/wiki/Free_market_capitalism#Concept...
Sorry but... WTF are you talking about?
It rewards self-destructive behavior in favor of short-term gains. Shareholders have *zero* commitment to the companies they buy shares from and will happily switch their entire portfolios on a whim. It's essentially people chasing the new shiny thing every single day.
Let's not forget it's a known fact that people with insider knowledge will profit over everyone else.
How is that efficient in any shape or form?
> If they undercut the US companies and are willing to accept low returns on their investments, then the respective USA competition will be driven out of business by their investors, because there will be other sectors to invest in, with higher RoI.
You're basically explaining one of the reasons stocks are a horrible idea for distributing resources.
It has nothing to do with whether or not it's central or distributed, it's merely the incentives they create. It's essentially Goodhart's law on steroids.
Please get your definitions from someone reasonable (Adam Smith might be a good start) rather than Ayn Rand.
The theory posited above is that you could try to manipulate these signals as a sort of economic warfare. If you expect that every dollar you put into our aforementioned roofing nail factory will get you minuscule or negative return, nobody's going to want to invest in building/expanding nail factories, and they'll put their cash somewhere it can grow instead. This is all well and good so long as you've got happy trading relationships with people who can sell you nails, but if one day the nails stop coming--you've got a supply chain shock until you either open new factories or find someone else willing to sell nails to you. The theory here being that if you had a LOT of goods that became tied up in a single point of failure--someone forcing that failure could create a great deal of internal instability to be exploited for geopolitical ends.
As you point out, in practice what's efficient is what can capture the highest return, not necessarily the highest return per se. If say investing in education had high returns society wide but those returns couldn't be captured, that's not an efficient use of private capital.
And if so, why is that necessarily a good thing? Why should that be our goal as society as opposed to things like minimizing child mortality, increasing literacy rates, making sure we don't have a ton of our fellow humans living on the street in misery etc etc - things that make the lives of our fellow humans better? Why is capital growth the metric we have chosen to optimize for? Surely there's better things to optimize for?
Excuse the polemic, but infinite growth with no regard for anything else is the ideology of a cancer cell - and to me that is increasingly what it feels like when we are wasting all these resources on a dying planet just to make numbers go up.
> “The Congress shall have Power… To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”
There's a lot that's not captured by solely looking at dollars, like the examples that you bring up, such as quality of life, human welfare, and so on.
Number go up infinitely is due to inflation and that's basically just an incentive to not hoard cash indefinitely, and instead use it for something useful. But the only thing that uses up is numbers. Everything else is because people, on average, want more stuff and are willing and able to work hard to get it.
(Of course, this generally means that the markets chase the desires of those who have something valuable enough. People who don't will be marginalised by this mechanism, for sure. And of course there's lots of opportunity for people to steal or abuse powerful positions in the market to the detriment of others. Which is why a free market is not the be all and end all of organising a society, and other organisational structures exist to regulate it and to allocate resources in a less transactional manner)
I'd posit that markets are completely detached from the real world and are more of a speculative/religious element than an indicator of any ground truths.
Edit: I just realized I missed a sentence of yours where you kinda spoke to this. I still believe that this is more of a rule than an exception - there is nothing inherently tying markets and reality together - they're mostly about people making bets on what the next big hype is; not on what is actually useful to anyone.