The value of a given stock, and by extension of the stock market as whole, depends entirely on perception. If speculators perceive that a stock is likely to go up, they buy it, and if enough of them do the same, the price of that stock goes up. And if they believe the price of a given stock will go down, they sell it, which drives down the price if enough speculators also sell their shares. This is altogether obvious — it’s the way one might explain the stock market to a child — but you wouldn’t know it by listening to the ever-present news reports on the vagaries of the stock market, which insist on the fiction that the actual value and profitability of companies are what drives stock prices.

Sure, the price of a stock does reflect to some extent how well that company is actually doing, since that’s part of what shapes the perception of speculators, but unless a company is obviously tanking, it’s only a sideline in the way the stock market functions.

We hear so much about the need to boost “investor confidence.” Gee, is that because Wall Street analysts are so worried about our collective feelings of contentment? Of course, not, it’s because “confidence” will lead people to buy stocks, thus raising stock prices and increasing the wealth of the largest stockholders.

The notion that a healthy stock market is good for everyone is presented as a given. It’s even conflated to mean that if the stock market is up then the economy is doing well, and that should benefit everyone since most people need a job to survive, and if companies are doing well they are able to hire workers. But one thing has very little to do with the other. When companies announce layoffs their stocks usually go up, at least in the short term, which is the only term speculators are interested in..

This is from an article about hedge funds, which are especially pernicious (from what little I understand of them), but what the author says applies broadly to “short-selling,” the widespread practice engaged in by speculators of buying stocks to keep them only for a short time in order to turn a quick profit by taking advantage of the market’s constant up-and-down shifting:

Too much speculation turns the markets from an investment vehicle into a casino. Most commentators about the market ignore this. When the market suffers big losses on a single day, they find some small piece of bad economic news and attribute it to that. When the market gains a lot on a day, they look at the overall upward direction of the economy and attribute it to that. When the market stalls and seems to move aimlessly, they say the American economy is stagnating. The point is that even though the market is behaving in unfamiliar ways, it is explained as if it were behaving in traditional ways. Nowhere is the change in the players in the market recognized. The change in the means by which large players seek to profit and the greater role of the hedge funds and of speculation via short-selling is ignored.

And what about the notion that most average people have investments in the stock market and therefore bad performance hurts even the little guy? According to the Economic Policy Institute [pdf]:

Less than half of American households are invested in the stock market in any form –either directly or indirectly through mutual funds or 401(k)s. The percentage of households that own stock was 48.6% in 2004. The percentage of households with more than $5,000 in stock was 34.9% in 2004. The wealthiest 20% of households own over 90% of all stock value. For the top 1%, the average value of stock holdings was $3.3 million in 2004. The average value of stock holdings for the middle 20% was $7,500 in 2004.

No doubt it’s frightening for those who have 401(k)s invested in the stock market to see their retirement shrivel up. Yet the majority of Americans have very little or no investment in the stock market at all. So why is there so much emphasis placed on the stock market in the public discourse? Because it benefits the wealthy, of course. As long as people keep on buying stocks — and at the very least refrain from selling the ones they have — the wealth of the rich will continue to increase. At the same time, the little guy who has no insider information and is not savvy about stock market dynamics is the one who will get screwed by the shenanigans of speculators and large investors if he dips his toe in those shark-infested waters.

Every day when we listen to the news, we’re just being treated to more of the proven fallacy of trickle-down economics. When the rich get richer — surprise! — the poor and middle class don’t benefit at all.

The solutions to the world’s problems are known. This struck me recently when I was reading a scathing article on the folly of our collective inaction in the face of environmental destruction in Harper’s:

The general reaction to the apparent end of the era of cheap fossil fuel, as to other readily foreseeable curtailments, has been to delay any sort of reckoning. The strategies of delay, so far, have been a sort of willed oblivion. The dominant response, in short, is a dogged belief that what we call the American Way of Life will prove somehow indestructible. We will keep on consuming, spending, wasting, and driving, as before, at any cost to anything and everybody but ourselves. This belief was always indefensible—the real names of global warming are Waste and Greed—and by now it is manifestly foolish. But foolishness on this scale looks disturbingly like a sort of national insanity. We seem to have come to a collective delusion of grandeur, insisting that all of us are “free” to be as conspicuously greedy and wasteful as the most corrupt of kings and queens.

It’s no mystery that the degradation of the environment requires a massive realignment of our ways of consumption. We have to consume far less, waste far less, pollute far less. And to resist inequality and greed we have to also consume less, to turn over less of our money to the corporations that are perpetrating wholesale injustices. And we need to seek out and put into practice ways to function equitably and sustainably. Yes, of course governments and corporations are at fault, and the possibility of swaying them can seem like applying pressure to immovable objects, but that’s no reason not to try. The powerful bullies of the world hold most of the strings, but not only is there a lack of broad popular commitment to changing the fundamental conditions through grassroots mobilizing, but basic conservation and measures to foster equality are not widely acted on by even most individuals, in the spheres within which we each have direct control.

There’s a wide range of possible action and degrees of commitment. Shopping at eco-boutiques or buying only fair trade is well and good, but for most of us it’s not a useful option. We can’t afford it, and buying a few trinkets here and there is not much of an answer. A much more radical transformation of how we think and live is going to yield the most results.

But even for those who are not radicalized and don’t want to see ourselves as living an alternative way of life, there are possibilities for transformation, both big and small. Many will say that the public has given up, that we see ourselves as so powerless we’ve all just collectively thrown in the towel. That’s why we don’t vote, don’t show up for protests or community events, don’t even try to make our voices heard or alter how we live. Yet we make choices every day, and those choices have both harmful and useful consequences, and when multiplied by the hundreds of millions, even only counting those of us in America, they form the fabric of our world.

Given even the dismaying choices of voting for an awful or a more awful candidate, tens of millions go out to the polls to specifically choose the more awful option. And in our own lives? Why was the average home size in the United States 2,330 square feet in 2004, up from 1,400 square feet in 1970? A larger home is less affordable and consumes more energy, so why the folly of choosing to live in one? Of all the various types of available automobiles, why does anyone buy anything other than the cheapest or most efficient (which often go hand in hand)? Sure, there are many variables. A given community that is seen as the safest and offering the best schools may only have expensive housing. But then why do we not question the fear that leads us to assume that slums should be left to the desperate and poor and that those who can afford it, even if only just barely, should ensconce themselves in sheltered and sanitized communities?

I can see the furrowed brows of those who will say that the victims of the powerful ruling elites are not the culprits. Yes, those of us toward the bottom — or even middle, with the exception of only a few at the very top — of the economic ladder didn’t create the conditions that all of us are forced to exist under, yet just by looking around, there doesn’t seem to be any collective or individual will to change even what conditions are within our control. If you think environmental degradation is worrying, then conserve. If you deplore inequality and human suffering, then don’t support the companies that perpetuate both. Or withdraw your support to the extent that is feasible for you.

The ugly truth is that we are all complicit, unless we are at least trying. It’s important to care and to become informed, indeed those are necessary steps, but the next step, it seems to me, starts with the most basic: transforming our day-to-day.

MickeyZ writes, in No Innocent Bystanders: Riding Shotgun in the Land of Denial:

Their participation in the two party farce and their acceptance of lesser evilism, however, are not seen as the problem by those in the know. It’s all Bush’s fault. There are no innocent bystanders when our money and/or rhetoric support the world’s most powerful military and the corporate status quo. But if we just keep telling ourselves it’s all Bush’s fault, we can sleep better, our innocence wrapped around us like a big white SUV.

The heady promise of liberation of our very thoughts and assumptions, and the means to turn those thoughts into actions, is real and accessible. These perhaps controversial — a bit too dramatic? too optimistic? — quotes below are from Crimethinc. How to put them into practice is left up to us, but certainly we can each see a vision of ourselves that includes choosing to live, at the very least, with much less waste and material consumption, but without taking on the notion of giving something up or forgoing what we care about and love:

Look at the world around us; it is a world that we have created. We transformed the old world into this one—but why this one? Is this the world we would have chosen, if we had considered in advance the question of what the best of all possible worlds might be? But before you despair, think—we created this world, it is we who make it up. Could we not make another world out of it, then, if we chose?

But this is how the revolution begins: a few of us start chasing our dreams, breaking our old patterns, embracing what we love, daydreaming, questioning, acting outside the boundaries of routine and regularity. Once enough people embrace this new way of living, a point of critical mass is finally reached, and society itself begins to change. From that moment, the world will start to undergo a transformation: from the frightening, alien place that it is, into a place ripe with possibility, where our lives are in our own hands and any dream can come true.