Markets, Productivity, and Happiness in a Historical Perspective

Speculation and economic stability for French liberal economists (1850-1914)

De Paoli Joachim, Centre Magellan - iae school of management - Université Lyon 3

This paper focuses on the analysis of speculation by French economists from the second half of the 19th century to 1914. We will first explain that the starting point of the analysis is a controversy about the nature of speculation. For some economists, it can be assimilated to gambling, while for others, it is simply a stock market operation and therefore appears to be reasoned. It is this vision that will gradually impose itself and that will lead economists to insist on the benefits of speculation. This will allow us to demonstrate that economists agree that speculation has a positive effect in terms of economic stability by allowing a smoothing of prices. Finally, we will see that the different authors recognise the need for a futures market so that speculation can fully realise its positive effects by transferring the risk from actors with the ideas and capital necessary to develop a country's productive capacity to actors willing to bear the risk.

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Keywords: Speculation, Stock Exchange, French Liberal School, Finance, Economic Stability

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