How does the stock market create social production or wealth?

[C.S.]

It seems the stock market adds little to society as a whole but instead just creates individual wealth. I'm all for individual wealth and all; but only if it also raises all boats.

What social wealth is created by the stock market?
Listen all. I am all for people making money. I am against people inventing money.

[robot_hooker3]

The money people pay to purchase stocks are used by the companies for research and development, expansion (which requires hiring more employees), etc.

If the company does well, it pays a percentage of its profits back to its stock owners/shareholders, who can then use that money to pay bills, buy food, go out for dinner, etc., all of which keep other people employed.

[Zaza]

OMG.....Do you think only rich people have a vested interest in the stock market?

Since when do I have to work to float my neighbors boat?

[Poohcat1]

The market itself does not stimulate the economy. What it does do is provide a one stop shop for people and countries who want to invest money. When that money is invested in U.S. companies, those companies can grow larger, be more innovative and hire more people. A market crash does just the opposite. It creates an unwillingness on the part of investors to risk their money...thus shuts down companies who would otherwise depend on the financial input that a raise in their particular stocks would bring, thus shutting down their ability to be innovative. The more the market drops, the less money is available to companies....and when you combine that with the general population becoming afraid due to the market downturn, spending comes to a halt. That halt in spending then takes away company profit margins and cuts production needs...thus people lose jobs.

[Phoenix Quill]

The Stock Market funds Corporations
Corporations create jobs.
Jobs are social wealth.

Should we add a 'duh'

[Ray Eston Smith Jr]

In theory, the stock market allocates resources to the most productive companies. In practice, I don't know if it really works. For years, stock prices have been unrealistically high, higher than what would be calcluated from company earnings and growth in earnings. Those inflated stock prices would seem to divorce the stock market from the realities of the real market economy.

Stocks and bonds in theory should create enormous wealth by providing a way for people to make secure investments in corporations they know nothing about. But most of those corportations are run by executives who are paying themselves multi-million dollar salaries. I think they're a bunch of crooks who've been stealing from the stockholders, the employees, and the customers.

We need a way for private free markets to allocate resources at the highest levels. Ludwig von Mises proved logically that it is literally impossible for governments to do that. But we need better institutions than corporations and stock markets. I'm hoping something will evolve out of the internet.

Ray Eston Smith Jr