FondsGoetheanum: Economy growth

Stock markets and ethics, do they belong together?

Companies are primarily human communities that provide economic services. Seen in that way, people continue to be traded when companies are traded. There is a need for action.

By ‘exchange’ we mean an organized market place. A place where goods are exchanged. By ‘commodity’ we mean the goods offered in a market. We are familiar with the regularly held farmers’ or municipal markets, where producers and traders offer their products. The stock exchange is similar; it is just that what is exchanged is more abstract.

Learn from local markets.

Up to 200 years ago slaves were traded

As a matter of fact, economic life is not directly concerned with ethics. As slaves, people were also traded until about 200 years ago. In order to address the question of ethics in the stock exchange, we therefore have to think about what is tradable. Not all things are tradable; not everything can be called a commodity.
Today, companies, more precisely shares in companies, are traded globally. However, companies are primarily human communities that provide economic services. Yet share dealing means that people are also traded when a company’s shares are traded. It is just that this way of trading people is subtler than before.
In principle, there is no objection to the fact that a person becomes a shareholder or a bondholder of a company and later, for whatever reason, wants or needs to leave this role. To do this, opportunities are needed; even a marketplace. This is the financial side. But the human side of a company, the management and the personnel providing the service, should not thereby be traded.

Have shares become an anachronism?

Completely different processes would be necessary in order to transfer companies in a socially compatible way to a new management. The question is whether the share is the right form at all, because it combines both financing (in the form of equity capital) and ownership (in the form of the management's decision-making). Should we not reinvent the company? Should we not completely separate finance and management, so that shares no longer exercise control over ownership and management?
A further question arises: Is the process of supply and demand the only way of forming prices in a marketplace? Because supply and demand are always corrupted by a third element: money as a means of payment. In this way money competes with the market process, because trading then always involves supply and demand for money.

The stock exchange could learn from local markets

If too much money is in circulation, prices rise. This appears as inflation in the consumer goods sector and as bubble formation in financial and real estate markets. We therefore need associative price formation rules – that is to say, rules agreed between partners, especially, between producers and consumers. This is what happens in a local market place by virtue of its closeness. Similar is needed in stock exchanges, in order to re-orientate price formation.

Daniel Maeder