You can very well start a business for some other reason -- even in America, you have the concept of "A Not-for-profit Business". Actually, perhaps only in America do you need to have that as a separate concept -- my guess is that this is because elsewhere, people aren't as likely to forget that the possibility exists, so they include it in the general concept of "A Business".

I think a case can be made that these other goals are not inconsistent with making a profit - indeed they can alter the balance in it's favor. Most business is run by bean counters who's very job is it to not just make the company survive, but also thrive.

I wouldn't be willing to stake a claim that many businesses (and individuals) don't have other goals in mind. But I have yet to find a company that isn't totally infatuated with the bottom line - even non-profits can treat their employees as commodities as they seek to maximize input and output.

99%[*] of the money "provided" by 99%[*] of current stockholders is "provided" to other, previous stockholders! Only the tiny proportion of money used to purchase stock in publicly (or privately, for that matter) traded companies that represents stock bought on initial (and various forms of additional) issue, actually goes to "the corporations" -- but of all the trillions of dollars of stock trading that goes on every day, all over the world, the overwhelming majority is paid to whoever happens to own the stock that you're purchasing from them, which is usually not "the corporation" in question, itself.

Are only those who are original investors deserving of compensation for their money? By delineating a difference between intial holders and players that get into the game later, you seem to make to case that a stockholder who buys stock on the open market is not supplying money to the corporation, and therefore is not an "investor" in the company.

The money supplied to the corporation in the original issuance of the stock is still floating around in the companies books somewhere - it did not suddenly disappear simply because the original stockholder got out when things were good. The new stockholder has assumed that debt and paid the original stockholder some additional cash based on the current market value of that stock. That additional cash that was supplied to the original stockholder represents a profit for making their original investment. As I said in another post, one of the primary attractions of stocks is the ease with which they can be bought and sold - ie their liquidity.

Or are you making the case that it is unethical for a stockholder to sell their stock at a profit? Such things would certainly discourage anyone from investing in companies - ie supplying cash.

As one consequence of the preceding, most of all current stockholders are NOT "the ones who provided the money to the corporations", nor are hundreds of "generations" of prior holders of the same stock. To (most of) them, the stock is not really a "share of a business" at all, but just a piece of paper that in itself represents a potential profit -- another kind of lottery ticket, pretty much[#].

Over the long term, investment in the stockmarket seems to be a good investment. As with anything in our economy, there are ups and downs, with certain losers and winners in the short term - ie speculators. But calling the stock market a lottery is a bit of a stretch. It might seem strange but lotteries and gambling are a much more predictable model of conducting business than is any investment in the stock market.

What makes lotteries and gambling so much a vice is not the risk involved, but rather the very lack of risk involved in the companies or states that are conducting such things. Take any casino, and I'll wager that they know exactly to the fractional percentage exactly how much they will skim off the top. Lotteries are even worse, where they legally designate the percentage of money that is removed from the pot before awarding to the winner. In other words, the lottery is not like the stock market because it represents a rigged game. The stockmarket shares the concept of risk with the sport of gambling, but I'd venture to say that risk and gambling are seperate concepts.

No, they really aren't. Imagine, Chris, the opposite: A "corporation" that is explicitly designed not to provide "the economy" -- society as a whole, as we who haven't been blinded by our MBA degrees like to put it -- with some tangible good;

You confuse two subjects. First, what is the purpose of going into business from the standpoint of the persons doing business? The second concept is much different - why do governments (from a societal standpoint) allow business to operate?

Now one can easily argue that businesses are in the business of making money. Depending on your political leanings, one can argue whether such self-serving behavior is good or bad. The free market economists try to make that case that behavior which is geared toward unfettered markets will tend to serve the public purpose by providing jobs and political stability as a side effect. But the creation of jobs and economic stability is not the primary purpose of business.

Even a resolute marxist would agree that the purpose of capitalistic business is to make money. But they tend to view it as a case of business (capital) making their money at the expense of employees (labor). Now I suppose it's possible to be an idealist and believe that business has some other goal in mind, but I'd say the evidence would be scant and assume a certain amount of benevolence to the corporate heads that I fail to see.

In my more (pragmatic?) view, companies will treat their employees like shit if their is money to be made at treating them like shit. If a company has an economic motivation to build up trust with employees and treat them as a valuable resource, then they will do so.

The only question is whether business really has the foresight to see which strategy leads to a maximum. Or whether they choose the easy, but possibly less profitable, route.

After the first wash of the day, the shirt is already clean. (Basically, any other make-work bullshit, or a Ponzi scheme [i.e, the same thing, only without even the illusion of useful work], will do for the example.)

Are you making the assumption that all business transactions have to represent some societal good? Many transactions have a very neutral effect on the overall good of society - they neither help nor hurt. Other transactions have a very deleterious effect - environment, etc...

Most governments are not too concerned upon money flipping, as eventually such schemes tend to economically unviable in the long term. Though there are rules and regulations (SEC) which try to minimize the amount of damage when such schemes tend to fail - i.e. they seek to protect investors. But the protection is not geared towards preventing people from spending their money on schemes they know are not producing goods and services. Rather the protection is aimed at preventing companies from passing off such schemes in a manner that it appears to be a valid business from the outside.

Not that such regulation is 100% effective. When you have companies like Enron doing such things, and a supposedly independent accounting firm giving their blessing, it's hard to judge these things as an investor. The harm is not in all the jobs created by such schemes, but rather the deception in trying to pass these things off as something which they are not.

As one consequence of the preceding, most of all current stockholders are NOT "the ones who provided the money to the corporations", nor are hundreds of "generations" of prior holders of the same stock. To (most of) them, the stock is not really a "share of a business" at all, but just a piece of paper that in itself represents a potential profit -- another kind of lottery ticket, pretty much[#].

Much of the modern economy is predicated on the invention of new forms of money. Cash - which is just an IOU - is simply one form that people use to conduct transactions. Barter is also useful in very limited contexts, though it tends to be much less efficient.

Other forms of liquid assets include things like stocks and bonds, which are also promisary notes. Like cash, they have no intrinsic value in and of themselves, but they do "represent" the ability to translate that piece of paper into goods and services, or at least other forms of paper (ad infinitum).

The modern economy is very much dependent on a variety of forms of money. Without said instruments, we as a species tend to sit on top of our money, resulting in less (efficient?) transactions. From a psychological standpoint, we tend to trust these little pieces of paper, even though they have very little value in and of themselves. We do a lot of exchanging of paper and the exchange of that paper is very fundamental to keeping the world economic engine flowing - albeit not always smoothly.

Attempts to regulate the flow of money have met with very little success. Some instruments, such as junk bonds, can be successfully regulated only to the extent that perceptions can be altered to cast doubt on their ultimate exchangeability - kind of like confederate dollars. But as long as people are willing to trust these soft forms of money as liquid assets, then there will be people that are more than happy to issue their IOU's in exchange for more widely accepted forms of paper.

The reason people do not invest in cash (beyond the currency speculators) is that they tend not to multiply very fast. If I invest an hour of my time and labor to get a dollars worth of cash, I'd probably be foolish to sit on that dollar, as it has no built in monetary interest - indeed with inflation it's value will likely go down in time. In addition, if the government is overthrown or decides that it will no longer respect said dollar, it becomes a worthless piece of paper. Of course, if the government is stable, has a sane monetary and fiscal policies, then I can somewhat trust that the dollar will retain some of it's value over time.

The same aspects are also applicable to stocks. If I invest in a stable company that has sound practices, I'll probably do better than if I hung onto the cash (and sometimes better than simply putting the money in a bank). At some level, I have to trust that the company is a safe investment, where the corporate heads won't have a meeting someday and decide to walk off with all the company assets and set up shop in Brazil.

Now to the original question. Why are there such wild fluctuations in the paper dollar to stock price? The answer is quite simple. Lots of people make mistakes in determining the true value of a piece of paper. No surprise there. From the stockmarket standpoint, such fluctuations are not just frivolous exchanges, but rather they are the instruments by which the true value of stock (ie the worth of that piece of paper) can be found. Without those fluctations, the economic value of stock will not get corrected.

There will be winners and there will be losers. Those that make the correct decisions will be rewarded. Those that make incorrect decisions will be punished. Such things are intended to provide a risk-reward relationship, so that the economy can move towards equilibrium at a much faster pace. It's all about money - with money being little more than the perceived value to translate a piece of paper into something more tangible or rewarding in the end. Instead of stocking up on nuts for our future, we stock up on the promise of something that can be exchanged for nuts somewhere down the road.

That's just simply a sign of a bad set-up; so, yes, again: "The concept of incorporation" may not be so fucking great as you seem to think.

Depending on what your "goals" are, it's the most incredibly efficient instrument of money invented in the last millenium. Not great at protecting the environment or providing job security. But incredibly efficient at supplying cash to the corporate world. Because the pieces of paper are passed out in a very liquid form of money, where the exchange amounts to the trillions of dollars (remember that dollars are as arbitrary in value as are stock certificates), a lot of people are willing to invest in business.

The U.S. economy may not be too everyone's liking, but it is pretty damn obvious that it is a machine that is hard to deny the level of activity associated with it. The stock market plays a very central role in that machine. So much so, that the stock market is almost an economy onto itself. It provides a form of money that a lot of people are willing to invest in, thus creating a sink for more businesses to thrive.

Are such forms of money any more illusory than say "information", which is yet another form of money - though not nearly liquid. Information is only useful to the extent that it can be converted into something tangible. Or are we tend consider the only real form of economic activity revolves around those items which involve survival of the species - food, clothing, shelter, etc (heck the case can made that most clothing is not a tangible good, since we could survive without it if we didn't have those pesky morals in our collective heads).