Speculation is something that always existed. Hoping for a fast profit often seduced and confused masses of people. And then it led to crises. The chance to get rich without effort is just too much of a temptation, especially if it seems that you can get so much richer than if you worked yourself.
A neighbour showed it, and now everyone wants it. Equal rights for all! All you have to do is be a little more intelligent than the others, which, incidentally, is what everybody believes of himself. The objects of temptation vary from tulip bulbs to riches from newly discovered countries, to mineral resources, to new technologies. Some even speculate with war and peace.
Whenever extraordinary profits are expected and special growth is prevalent, or when the supply/demand relation changes drastically or even threatens to get all thrown about, the sharks of speculation are ready to bet high on this development.
Typical exaggerations, refined marketing lies and technological potential of nowadays have caused an excessive increase of this behaviour. Consequently, speculation grew to be a common sports and the call “I want to get rich without effort” became synonymous to a basic right. And the experts (investment banks) have systems the reaction time of which determines in nano-seconds if you won or lost.
The famous banking houses, too, occasionally collapse. It happens all the time, basically ever since money was invented.
And if you, the common citizen, do not take part in the game, you feel like you are “the moron”. The temptation to get rich with enterprise values, derivates or certificates really fast is just too great. No matter if we are talking minerals, currencies, pig halves or emission rights.
This is true even though the number of losers was always bigger than the number of winners. However, you only see “those in the light, not those in the darkness”. It seems to be normal even for banks to lose everything they have been acquiring over many decades in no time.
Greed blows out the brains. That is an old wisdom on the stock exchange. An “ethical enterprise” must not blow out its brains. “Un-ethical enterprises” play along in the roulette of speculation. They feel dependent on the stock exchange rate and pay allegiance to speculators.
The “shareholder value” demands of managers to think one-dimensionally. In exchange, they get murderously overcompensated through bonus payments that depend on speculative effects.
The stock exchange rate gets to be the most important target. In order to promote it, exorbitant growth numbers and unrealistic profits are propagated. Everybody looks to the next three months and develops blindness for what lies beyond that. The goal is to become the leader on the market (or even better: to hold a monopole), because that is allegedly the only way to fulfil the hopes of the speculators.
Those who provide the capital play along, too. They, too, get greedy and will no longer be content with their regular profits. In fact, the regular profit gets less important. The only thing that matters is the fast profit, combined with increased stock values.
An “ethical enterprise” must not let itself be caught by these mechanisms. It has to “stand aside” from speculation and develop a different attitude towards its profits. To be sure, in a (still halfway) free economic system like ours, even an “ethical enterprise”, has to make a profit. Mainly, it must have a free choice on what to do with its profit.
The capital owners of an “ethical enterprise” are entitled to a fair dividend. They must also have the right to sell their shares as they wish. But the capital owners of an “ethical enterprise” must not be speculators. They have to be satisfied with fair regular profits and a “non-speculative” value increase. That is: a value increase mirroring the actual development of the enterprise, rather than the speculative perception on the market.
INCLUDEPICTURE “https://www.if-blog.de/wp-content/uploads/2009/08/FischereiSchiff-300×200.jpg” * MERGEFORMATINET Profits at an indecent rate should be just as much a warning to the management as long-term losses. But what is an indecent profit rate? Well, it is fishy if a market leader shows a profit of one third of his turnover. Somehow, that sounds a little like exploitation and blackmail of (possibly even dependent) customers. In the long run, it cannot work well.
In an “ethical enterprise”, the profit rate should correlate wit the business risk. If a business transaction is extremely risky (even though it is hopefully based on ethics), a higher profit is acceptable. After all, this extra profit will be needed for reasons of sustainability, for example in order to build up reserves against a potential economical disaster.
In “ethical enterprises”, too, those who provide the capital must be adequately rewarded. If the risk is higher, they also have the right to higher earnings. But these higher earnings should correlate with the actual profit, whereas an increase of the total company value should be just a pleasant extra effect that is not added to the pay.
Thus, an “ethical enterprise” has to make a suitable profit. It should be neither too much nor too little. Profits must serve the capital fairly and be re-invested according to the rules of sustainability.
Now I hear disagreement: this cannot work, because capitalists always want maximum profits.
To be sure, there is plenty of greed. Yet some signals tell me that we are in the middle of changing values and that a new “era of sustainability” is in the making. This is a chance for greed to be stopped and the concept of “ethical enterprises” to spread.
Another question must be asked: do “ethical enterprises” actually need the stock exchange? The necessary means of production offer security, which means that they might as well be financed in another way, for example through banks. After all, this is what banks are said to be there for, isn’t it? An “ethical enterprise” should not aspire to great takeovers, such as make really huge amounts of money necessary. If nothing else, the negative experiences from most of the takeovers and merges should serve to teach that lesson.
Now I hear you counter: But we need the stock exchange for growth! Growth is something that an “ethical enterprise” must not see as value in itself or necessary means for scaling one’s profit.
That is not at all to say that an ethical system is not permitted to grow. On the contrary! Growth is necessary for sheer survival; otherwise you cannot overcome the inevitable drawbacks. And it is a good rule to prefer making a little more, rathe than a little less.
But growth must be part of a sustainable process, making the enterprise stronger and more competitive, and also giving it a higher survival potential. And the best way to achieve this is striving towards a healthy growth powered by your own strength and financed with your own profits.
It is therefore a necessary requirement for ethical enterprises that they use such profits as they gained respectably through real business transactions in a sustainable manner for the enterprise, that they give their owners a fair share of the profits and that they avoid all active and passive speculation.
And you actually find quite a few German medium-sized enterprises that (among other things) answer to these requirements.
RMD
(Translated by EG)
P.S.
Also, I am not sure that the stock exchange can help to solve the big future infrastructural problems. It already failed too often in the past. The hope of immense profits caused wonderful flourishes, but often nothing remained in the end.
Many examples, such as channels, railroads, and even the English Channel tunnel show that these kinds of projects are in better hands with state consortiums. The privately financed motorways, too, might in no time turn out to become the same kinds of boomerangs as the first sold and then re-leased underground systems and sewers of many German communities.
Incidentally, the pictures are totally fresh (like the fish), all taken at Gythio harbour.
Loading ...