Greening the Stock Exchange?

Marc Desaules

This brief comment appeared in Nouvelles, the quarterly newsletter of L’Aubier a centre for ecology and associative economics in Switzerland. The author is a cofounder founder of the centre and is active in the field of finance.

The popularisation of investment funds by the media has made the stock exchange accessible to everyone. Why keep a savings account if the stock exchange can promise two, three, even ten times the return with little extra risk and no effort? A month ago, this question exercised the minds of those involved in green and ethical finance. The World Wildlife Fund in Switzerland and the Declaration of Berne published a guide on the subject, with the at first sight laudable aim of providing information on ethical ecological investments.

According to the editorial, the guide will permit people to try out the stock exchange with a clear conscience. But is that really true? Is the simple fact of investing in the stock exchange defensible from the point of view of a sustainable economic life? I think not!

First of all, only a small part of the economy is comprised of quoted enterprises. That means that if the stock exchange attracts more and more capital, this is clearly to the detriment of small and medium businesses, the producers of the essential values of our economy. And what these businesses need most of all is capital with which to finance equipment and other means of production.

Secondly, in the long run, even quoted companies gain nothing from it because they depend on the market for their shares, with the price subject to the game of supply and demand. All elements of these businesses management, employees, suppliers, etc. are then under the constraint of continual growth in performance. One hint of weakness and the value of the shares falls, bringing the risk that the business will be taken over by another firm or forced into a merger. Whatever the scenario, the outcome is economically and socially detrimental.

Finally, the stock exchange doesn’t deal only with shares: it also affects especially the world’s national currencies. Any time and anywhere an exchange rate can weaken, sending a whole country into ruin and desolation, even as the capital concerned flees to other horizons.

It is the stock exchange itself that we need to reconsider. Above all, the fact that it transforms everything into an abstract and anonymous market. This would not be altered by making the stock exchange green or ethical. The real need is to reinvent the stock exchange so that the values exchanged there reflect social life in a concrete, rather than an abstract way.

In themselves shares are not at issue: quite the reverse. To want to distance oneself from the form of the stock corporation is an illconsidered gesture that throws the baby out with the bathwater. For the stock corporation is the legal form most adapted to linking investors and entrepreneurs directly and for putting capital at the disposition of initiative. Seen in this way, shares become meeting points where human beings can awaken to their mutual responsibility in regard to the real aim of businessbe it a specific enterprise or economic life more generally.

In short, we need to create a stock exchange that is transparent, open and `solidaire’, where the values exchanged are determined by the reality living between the people involved and the wealth created by the businesses, completely independently of the pressure of supply and demand from third parties on the capital side.

This article first appeared in e2, Jan/Feb 2001

e2, Journal of Associative Economics is published bimonthly and costs £10 p.a. PO Box 341, Canterbury CT4 8GAe2, Journal of Associative Economics is published bimonthly and costs £10 p.a.

PO Box 341, Canterbury CT4 8GA



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March 2001