ToughDiamond wrote:
dddhgg wrote:
I simply don't agree that buying shares involves ethical problems. In fact, investing in shares is very socially useful, in that it provides companies (and thus employers) with capital they would otherwise have difficulty raising. So, in a sense, the money invested in shares is given back to the employees. The problem of certain big shareholders with no heart for the business wielding too much power as regards corporate policies is another matter altogether, which can easily be remedied through new legislation. I would suggest, for example, that it simply be made illegal for hedge funds and such to buy more than a fixed percentage of shares in a company.
Don't shares put a huge pressure on companies to maximise their profitability, on pain of losing their share capital? And isn't the most effective way of increasing profiitability to get the workforce doing more work for less wages?
Not necessarily. A lot depends on who the shareholders are and how the associated voting power is distributed. If the majority of shares is dispersed among small capital shareholders, each of whom is relatively socially responsible and doesn't require outlandish returns on their shares, then there is little chance that the company will try to make huge profits over the backs of its employees. This is why I'm all for paying employee's bonuses (partly) in shares and options - not only the big managers, but every single employee should receive these. It ensures, firstly, that the shareholders will act both in their own interests and in those of the company, since these coincide for the greater part. Secondly, it builds loyalty. Likewise if the majority of shares is in the hands of the company's (preferably private) owners who have an emotional as well as a financial interest in seeing the company and its employees flourish - for example because it's a family business, or because the company makes ecologically responsible products.
As for your second point, this is true, alas, in many cases, but it happens mainly in company's where there's a very large distance between those who provide the capital and the actual employees. Mostly these companies have been taken over by parasitic investment funds and other shady conglomerates, which use the companies they own and control as cash cows only, and often leave the empty husk to descend into bankruptcy. But like I said this can and should be remedied by new legislation limiting the power of such groups. Also, it can be argued that it's actually quite rational to pay one's employees well. Arch-capitalist Henry Ford is a nice example of this. While he forbade his employees to enter a trade union, he decided to pay them the unprecedented wages of $5 a day (in the 1910s), on the condition that they lay aside a small sum each month in order to buy a Ford automobile. This is a win-win situation, the employee gets a car and very nice wages, while Ford boosts his own sales. Likewise, macro-economically, it makes perfect sense to pay high wages - more spending power, more revenue, and ultimately more profit. But it does take a long-term vision to implement such a policy, instead of the short-term money grabbing we too often see today.
In brief, I will be the last to say that classical capitalism has no faults; we've seen plenty of those lately. Any economic system, however, places someone at a disadvantage, be it the ordinary, hard-working citizen, the elderly and infirm, or the entrepreneur. But I still think that capitalism coupled with social security (as implemented by many West-European countries) is the best system available nowadays, because its faults are, I believe, not inherent to its basic structure but to the way it's implemented in certain areas (such as banking). And these implementations are for the most part flexible and easily "tweaked".
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Dabey müssen wir nichts seyn, sondern alles werden wollen, und besonders nicht öffter stille stehen und ruhen, als die Nothdurfft eines müden Geistes und Körpers erfordert. - Goethe
23 Jan 2010, 4:01 pm
May you fulfull your dreams. 
Which isn't to say that it can't possibly work.
