elwoodblues

Come again? Last I heard, something like 65% of the public held stock.

Me and Me

Owning stock and owning a company are not the same thing.

elwoodblues

But isn't it roughly the same thing as owning 'part of a business'?

echidna

Happy Wonderer

This is a non-sequitor. Obviously the Soviets created factories, generally in response to a master X-year plan. I don't think that history has been very kind to planned economies; they tend to be inflexible and discourage innovation. Innovation was still rewarded in the Soviet Union, but generally by an increase in priveleges, "worker of the year" awards and other means which -- while effective -- are not nearly as effective as the prospect of making a zillion bucks and getting all the girls.


In a more pure Marxist society, people working to further the goal of the commune would realize that a factory needed to be made (although Marx was suspicious of factories in general having seen the slums caused by the factories in England.) Some people would work towards creating and operating the factory, others would work towards providing the materials. Planning, etc, would be provided by other people. The key idea is that none of the positions are rewarded better than any others. For some reason I'm drawing a blank on the slogan for this, it was something along the lines of "each according to their abilities giving to each according to their needs."

The incentive for building the factory is the good of the community as a whole. The idea is that life is better for everybody if we have this factory -- now we can produce better woolen mittens for our fellow comarades much faster, helping them to produce more potatos to feed us with.

The Soviet Union limped along with this kind of motivation for quite some time, and I don't think that all of their problems could be blamed on their social system. We are very blessed in the US with lots of easily-exploited natural resources (which we are using up, but that is another story.) It may seem strange to us that a community would build something like a factory without some huge financial incentive -- but consider what a community threatened by military threat or natural disaster can do.

The problem is that for a large, complex society there needs to be some group that does the long-term planning. This almost by definition turns into an exploitation of capital (in other words the people doing the planning have natural incentives to make decisions that reward themselves rather than the community.) Power and capital are almost inseperable, except in Utopia.

HW


Slightly O.T. I would argue that a key problem with central planning is that it has to avoid risk. If you control all of the potato production you had damn well better make safe decisions or everybody is going to starve. In a free market, individuals make the decisions based upon individual predictions of the future and tolerance for risk. Many of them will be wrong, and those individuals will go out of business. A few of them will be spectactularly correct. This potential reward means a few people will be willing to innovate or go against the "common wisdom." This adds resiliancy to the system.

Consider oil. When prices are low and supply seems assured, a centrally-planned system might decide to stop all further exploration and convert the workers into SUV builders. When a crisis happens, this economy is screwed. In reality, the potential reward prompts some companies to keep developing resouces (at some level) even though common wisdom says they are making a stupid decision. When a crisis happens, you have at least some new resources in place.

(I'll concede that oil isn't a really good example because it is a limited resource monopolized by certain geographic areas, but the subject is on my mind at the moment for some reason...)

Me and Me

No

It is owning a POTENTIAL of a part of the profit of a business. Potential because you can't benefit from a stock unless you sell it and get money for it, so the average person doesn't benefit from owning it proper anyway. I grew up in a poor area of the city, and noone talked of or had any interest in spending what little money the get on a piece of paper that might get them more or might get them less than they paid for it.

The majority of kind of stocks that are owned by common people are the 401k type of stocks, which doesn't even benefit a person until many years after they buy them. THe purpose of having a system with selling stocks was never so that alot of common people could own part of company. It was done to help the turnover rate of the consumer to the corporation go at a faster rate, which turns into a higher ratio of profit.

elwoodblues

I think you have a very warped view of how stock portfolios work. Day-trading-like short-term trading is a pretty small part of it, an interesting side-show. Stock-holders are pretty happy with a few points over prime profit per year; the ridiculous IPO stock skyrockets, overnight millionaires of the late 90's are not the norm. Most portfolios are entered into with a long-range view, say at least ten or twenty years barring unexpected necessity.

Me and Me

Also you pretend as if there is an endless supply of stocks to buy. A few people owning alot of stock is natural tendency that is why it is the way it is now.

Just by curiosity do you own any stocks?

elwoodblues

No, I do not.

char

Dividends.