Henwood has written a ton on this and I'm just scribbling, but if resources are fungible inside the firm, then the fact that revenue from new issues does not itself finance plant and equipment means that in general, the existence of a secondary market in stocks -- the stock market -- could facilitate cash flow into the firm that could finance new investment. Obviously it finances shit as well.
Re: redistribution, I meant the wealthy are better situated to profit from trading and fleecing the middle class, though of course the wealthy fleece each other too. On Mon, Apr 27, 2009 at 11:41 AM, Bill Lear <[email protected]> wrote: > On Monday, April 27, 2009 at 10:29:21 (-0400) Max Sawicky writes: >>OK, I'll play devil's advocate. The stock market provides a liquid >>secondary market for stock issues, thereby facilitating the ability of >>firms to raise capital for new investment, among other misadventures. > > Ok, this was basically what I had in mind, but I'm still confused: if > most capital for businesses is not raised through stock offerings, > then this liquidity is not really valuable, except to the extent that > when a person first invests in newly-floated stock, the prospect of a > liquid market would make the person more likely to invest, I suppose. > > But, then, this sort of obscures the economic purpose (which I take > to be actually producing and selling things), correct? > > If a person invests in a new stock, they have two options: sell the > stock or get a slice of the profits the company generates. How many > people actually do the latter? > >>I'd say it is also a machine for redistributing wealth from hapless >>middle class savers to the very wealthy. > > You mean simply because the very wealthy are usually closely connected > to the institutions and thus have better information and/or get > sweetheart deals? > > > Bill > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
