The Jewish Ethicist: Speculation

The Jewish Ethicist: Speculation

from aish.com

By: Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem

Q. Some people make a lot of money on speculation. Is it really ethical to make money without producing anything, just by guessing which way prices are going to move?

A. Fundamentally, speculating is an economically productive activity. But there is no question that it does present some ethical challenges.

The economic importance of speculation is that it encourages the efficient allocation of resources. When speculators hoard a commodity anticipating a future shortage, the result is that when there is indeed a future shortfall in supply, adequate stockpiles will exist. In the framework of modern competitive markets, speculation contributes to effective exploitation of scarce resources.

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