Stock Ownership

boddhisatva foucault at
Sun Apr 30 07:57:31 MDT 1995

		Mr. Keen,

	The theory looks eminently reasonable.  I have one question, though.
What do we make of the fact that companies these days are speculated on with
a very serious eye to the full takeover price, and the liquidation price.
Traders today have to consider, because their competitors are considering,
owning the company lock, stock, and barrel.  Thus you've got many companies
trading at unprecedented earnings multiples, where no profit is there to add
present value.

	I accept and enjoy the analysis that speculation drives its own
economies.  I've often thought so.  What does it mean in terms of surplus
value ?  If a company can generate so much value beyond today's product, how
do socialists "tap in" to that value on the part of workers.  Another thing
that interests me is where the speculator gets his money in the first place.
The rich control a vast majority of the productive wealth.  Their salaries
can't be much compared to their earnings from investments, interest rates are
relatively inflexible compared to the stock market, and yet there seem to be
a majority of portfolios with equities predominating.  Where does the cash
come from to fuel the rises and falls in stocks ?   Even if a firm makes
record earnings, its stock price will often outstrip those earnings.  The
better the company's performance. the more dizzying the multiples get.  I
just can't see how profit makes it's way into the speculative markets as
cash.  Does the increased velocity of money take care of it ?  Where are the
speculators getting their cash ?

	Finally, what would be the effect if firms became more proprietary ?
Would cash dry up ?  Would real profits soar without a cumbersome exchange
structure ?  Would there then be huge pools of cash ?  Would redistribution
actually decrease total marginal propensity to invest ?

	Feel free to pick and choose among these questions.


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