Do you think the stock market is socialist?

[Deleted User]

Part of me is thinking it's socialist as the profits are split between thousands of people. And also alot of pension funds will be invested in the stock market.

Compare Aldi (private) vs Tesco (on the stock market)
Both make £3 billion in profit. For Aldi, I assume all of that goes to the Aldi family. Whereas the Tesco profit will be shared between thousands/millions of people.

MaxiRobriguez

In a word, no.

The stock market rewards those who have the means to play the game with their capital - i,e: the more money you have, the more you benefit from it, the less money you have, the more it's an irrelevance.

Major private companies aren't typically owned by a small number of friends or family either, they will be owned by venture capitalists, angel investors, private equity firms etc - all of the people behind these possibilities are usually very, very wealthy.

If the stock market were to become more socialist then it would require workers obtaining shares in their company upon start date and forced selling on exit date, if they hadn't already done so of their own volition. That'd mean the better performing companies would end up rewarding workers in line with company performance rather than a wage.

bowlhead99

In both companies the rewards from running a business go to the owners and investors of the business. Everyone is free to set up businesses or try to convince others to let them invest into their already-established businesses. The businesses will seek debt and equity finance from the public or private markets whatever suits them.

Socialism is a bit like communism in that from an economic standpoint the means of production should be in the hands of 'the people', whether directly or through the government. Whereas capitalism is about having private ownership of the means of production and individual economic freedom.

I wouldn't say the stock market is socialist because the whole point of it existing is for individuals to participate in asset ownership in a supply and demand based market in which whomever can afford to pay the most will get a greater slice of the pie and more control.

Opening up the ownership of a business to the 'public' through a financing structure that raises money on the public markets (perhaps to lower the overall cost of capital and debt of the company) is not for some altruistic purpose like fixing wealth inequality, and it continues the 'survival of the fittest' funding model where people who have lots of money or invest in better businesses get the chance to grow their wealth, while people without assets, don't.

Albermarle

Part of me is thinking it's socialist as the profits are split between thousands of people

Investing in company shares is clearly a capitalist and not a socialist activity . You are benefiting from deploying your capital, and not by actually working for a wage.
However nowadays there is a lot more participation/awareness by a bigger % of the general public, either directly or indirectly than in the past. The phrase for this is 'Popular Capitalism ' which first popped up in Mrs Thatchers time I think , with the sell off of BT, British Gas etc.

JohnWinder

Markets are a feature of all economic systems. In Rome during slavery times, during English feudalism, under capitalism or socialism people came/come together to trade. So, ‘no’ is the answer.
In all societies (which survive) productive members produce more than they need solely for their survival, and at a most basic level that surplus is shared amongst all eg small children who are unproductive and the old and those temporarily incapacitated.
What distinguishes one economic model from another is who decides how the surplus of production is distributed.
In capitalism, the owners of the capital decide; in socialism the people who produce the surplus decide, ie the workers, managers and anyone who contributes to the production.
I suppose the Aldi family decide where Aldi profits go, and Tesco shareholders (as the owners) decide (or hand discretion to the board who do what the owners want, or be voted out). So rest easy, there’s no socialism there.

Flobberchops

If it was a socialist system, your profits would be "democratically redistributed" to those without shares, and people who had made losses on the stock market...

talexuser

Bill Maher's take:

"A hundred Americans get together and order a 100 slice pizza. The pizza arrives, they open the box, and the first guy takes 80 slices..... and if someone suggests, why don't you just take 79? - he complains loudly THAT'S SOCIALISM!"

Thrugelmir

newbinvestor wrote: »

Both make £3 billion in profit.

Is Aldi that profitable?

[Deleted User]

Lol. That’s what happens when words lose meaning.

[Deleted User]

Thrugelmir wrote: »

Is Aldi that profitable?

I don't know!

phillw

talexuser wrote: »

Bill Maher's take:

"A hundred Americans get together and order a 100 slice pizza. The pizza arrives, they open the box, and the first guy takes 80 slices..... and if someone suggests, why don't you just take 79? - he complains loudly THAT'S SOCIALISM!"

Americans hate socialism and make up whatever they can to demonize it.

That story sounds more like capitalism, the guy who took the 80 slices didn't do any of the work & just was lucky to be in the right place at the right time.