The death of stock markets

Let me start this column with a slightly rhetorical question - what is the main function of a stock market? It is to raise capital for a new business or investment opportunity, if one were to answer the question in a conventional sort of way. As Satyajit Das writes in his new book The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril, "Stock markets are designed to facilitate capital raisings for investments projects. They allow savers to invest, and provide existing investors with the ability to liquidate their investments when circumstances require." Now that is looking at things in the conventional sort of way. As John Kay writes in Other People's Money: Masters of the Universe or Servants of the People?, "The first companies to obtain listings on modern markets were companies like railways and breweries, with large requirements for capital for very specific purposes. Building a railway is expensive, and once you have built it the only thing you can do with it is run trains. You cannot use a brewery except to brew beer. Early utilities and manufacturing corporations raised large amounts of

This article was originally published on February 05, 2016.