Sustainable, equitable productivity is through realising potential and contributing without harm in free and fair markets, not through gambling and speculating for financial gain.
Money is as abundant as productivity, but non-productive financial speculation de-links money growth from productivity growth resulting in inflation of money without inflation of productivity. This discrepancy leads inevitably to market corrections and economic recessions that damage those trying to make an honest contribution, innocent of specula-tion. These corrections are a factor of current market systems, but not an inevitable factor.
The way current markets are designed permits and encourages non-productive financial speculation. National and international markets which centralise the trading of a single non-perishable resource to a single central market and allow the resource to be bought without taking hold of it distort the real price of the resource (the price set by the cost of production, supply and consumer demand). These markets allow financial corporations and individual speculators, that do not use the resource for consumption or production, to purchase a large portion of supply and withhold it from users that rely on the resource for consumption and production. The purchase of a great portion of supply makes the financial speculator a virtual monopoly that can name the price those needing the resource must pay, there being no alternative sources.
It is not necessary that the financial speculator be a single corporation or individual (although a single speculator has sole control) – numerous uncoordinated speculators also reduce the supply to users needing it for consumption and production, so raising the price beyond what would be mediated by production, supply and consumer demand alone.
The price of a resource in this market will keep rising for as long as increasing amounts of speculative finance purchase it, not to use, but to hold and on sell.
Any market centralised on a national or international level, confined to a single non-perishable resource, and allowing purchase without possession, permits and facilitates financial speculation that raises the price of resources beyond their full cost of production, regardless of whether producer supply is enough to meet user demand (as user access to supply is restricted by speculators pulling it from the market).
If resource producers were to increase supply so financial speculators could not purchase enough to restrict it to less than needed by users, the price would eventually collapse as speculators released their holdings back onto market. The situation would now be producer supply massively greater than needed by users (due to prior speculative removal of supply from the market) supplemented by the flood of withheld supplies released back onto market by speculators fleeing the market.
Such speculator-friendly markets should be eliminated or, the traders that buy, not to use, but to on sell, should be banned from these markets. Imagine a physical market of growers and sellers in which one person came along and bought all the produce, then proceeded to sell that produce at whatever price he demanded. There would be outrage, but, in one form or another, this is what happens on international markets.
To ban speculative trading:
In resource markets (gold, crude oil, rice, milk powder, cocoa, coffee, and so on), disallow financial derivatives that enable a right-to-use, without taking possession of, a resource.
In share markets, disallow trading in shares. Make shares only purchasable from the organisation. Shares cannot be traded, only transferred back to the organisation at cost. The only revenue from shares is from dividends or interest and there is no speculative trading in them.
In property markets, allow only ownership with occupancy.
In currency markets (foreign exchange markets), monitor and slow the market, restrict to sale for use, not for currency trading.
If the financial system is not improved, bubbles and crashes will happen more rapidly, the economic peaks and troughs will tighten. When energy (money) is introduced into markets faster than before (via borrowing) the bubbles are bigger, the crashes deeper, and the cycles quicker.
[Excerpt from The Common Purpose Manifesto]