It's No Gamble: The Economic and Social Benefits of Stock Markets

David Robinson is an economics professor and dean of the Faculty of
Social Sciences at Laurentian University.

Aimed at the inexperienced investor and at the undergraduate student
(neither of which is likely to be too critical), this introductory book
to the stock markets is in transit from class notes to polemic. Chapters
competently survey the market structure and risk sharing, as well as the
role of stock markets in corporate governance, mergers, efficiency,
ethics, and regulation, with references to the academic literature. (A
chapter on emerging markets in Eastern Europe is inevitably out of
date.) The tone of the book is defensive: “few institutions are as
maligned and misunderstood as the stock market.” Its overall
conclusion is that the system should be allowed to evolve in its own
way. The title has no real connection with the text.

The book’s most serious fault is that it fails to come to grips with
its major claims. The authors argue for stock markets because they
distribute capital, distribute risk, and provide control for investors.
They present no evidence—there is no evidence—that stock markets are
anything like the optimal way to achieve these goals. They are diverse,
disorderly, exciting, sometimes dangerous collections of institutions
that are evolving rapidly. If some markets are infested with shysters
and pander to suckers, it doesn’t really matter—we are stuck with
them.

Novices will learn that junk bonds and hostile takeovers may be good
and that Canadian stock markets may be about as efficient as American
markets, which are probably less efficient than those of other major
industrial economies.