The ethics of speculation

Journal of Business Ethics 90 (3):277-286 (2009)
Abstract
Recently there has been an outpouring of consumer frustration over rising food and energy prices. Many politicians railed against “speculators” who allegedly drove up the prices of key necessities. Is speculation unethical? This article reviews the traditional arguments against speculation. Many of the standard criticisms confuse speculation with gambling. In much the same way as ethicists now draw distinctions between usury and normal business interest, we draw a distinction between socially useful speculation and gambling. Gambling involves taking on risk with no plausible expectation of making a profit. Gambling may provide entertainment value to some people, but like other addictive activities causes grave harm to a subset of users. Speculation involves taking on a business risk with a plausible expectation that a profit will result. Speculators provide an important risk bearing service by taking on risks that others do not want. They help markets to function better by helping to incorporate information into prices as well as providing liquidity. Speculators may actually reduce shortages by causing quicker price increases that motivate producers to increase production and consumers to conserve. But even socially useful speculation may have an ethical dark side. Does such speculation cause damage by adding excess volatility to prices? Speculators may contribute to price bubbles. At what point does legitimate speculation become odious “price gouging?” We also draw an ethical distinction between speculation, which seeks to benefit from changing prices, and manipulation, actions taken to push prices away from their economically appropriate levels.
Keywords Ethics  speculation  gambling  manipulation  price gouging
Categories (categorize this paper)
Options
 Save to my reading list
Follow the author(s)
My bibliography
Export citation
Find it on Scholar
Edit this record
Mark as duplicate
Revision history Request removal from index
 
Download options
PhilPapers Archive


Upload a copy of this paper     Check publisher's policy on self-archival     Papers currently archived: 11,361
External links
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library
References found in this work BETA
Shaheen Borna & James Lowry (1987). Gambling and Speculation. Journal of Business Ethics 6 (3):219 - 224.
John A. Ryan (1902). The Ethics of Speculation. International Journal of Ethics 12 (3):335-347.
Citations of this work BETA
Similar books and articles
Analytics

Monthly downloads

Added to index

2010-04-03

Total downloads

51 ( #32,272 of 1,102,698 )

Recent downloads (6 months)

8 ( #29,527 of 1,102,698 )

How can I increase my downloads?

My notes
Sign in to use this feature


Discussion
Start a new thread
Order:
There  are no threads in this forum
Nothing in this forum yet.