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The Ethics of Financial Speculation in Futures Markets

In: THE WORLD SCIENTIFIC HANDBOOK OF FUTURES MARKETS

Author

Listed:
  • Ingo Pies
  • Matthias Georg Will
  • Thomas Glauben
  • Sören Prehn

Abstract

This article sketches an ethics of (financial) speculation in futures markets. (1) It identifies an intentionalistic fallacy prevalent in moral criticisms of speculation in general and of financial speculation in particular. (2) It scrutinizes the degree to which the recent debate on financial speculation with agricultural commodities follows the general pattern of moral criticism and its intentionalistic fallacy. (3) It then provides a theoretical and empirical in-depth analysis of long-only index funds' engagement in futures markets and concludes that moral criticisms which put them in the pillory as “hungermakers” are unjust(ified). This proves that ethics, understood as a theory of morality, can criticize moral criticisms of financial speculation on moral grounds. (4) Finally, this article discusses the option of interdisciplinary cooperation between ethics and economics.

Suggested Citation

  • Ingo Pies & Matthias Georg Will & Thomas Glauben & Sören Prehn, 2015. "The Ethics of Financial Speculation in Futures Markets," World Scientific Book Chapters, in: Anastasios G Malliaris & William T Ziemba (ed.), THE WORLD SCIENTIFIC HANDBOOK OF FUTURES MARKETS, chapter 24, pages 771-804, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814566926_0024
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    References listed on IDEAS

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    1. Irwin, Scott H. & Sanders, Dwight R., 2012. "Financialization and Structural Change in Commodity Futures Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 44(3), pages 371-396, August.
    2. Pies, Ingo & Prehn, Sören & Glauben, Thomas & Will, Matthias Georg, 2013. "Hungermakers? Why futures market activities by index funds are promoting the common good," Discussion Papers 2013-19, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    3. Pies, Ingo, 2013. "The ordonomic approach to order ethics," Discussion Papers 2013-20, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Pies, Ingo, 2014. "Interview zur Moral der Finanzspekulation mit Agrarrohstoffen und zur Ordnungsethik der Zivilgesellschaft," Discussion Papers 2014-6, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    2. Pies, Ingo & Will, Matthias Georg, 2013. "Finanzspekulation mit Agrarrohstoffen: Analyse und Bewertung aus wirtschaftsethischer Sicht," Discussion Papers 2013-24, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    3. Stefan Hielscher & Ingo Pies & Vladislav Valentinov & Lioudmila Chatalova, 2016. "Rationalizing the GMO Debate: The Ordonomic Approach to Addressing Agricultural Myths," IJERPH, MDPI, vol. 13(5), pages 1-10, May.
    4. Pies, Ingo, 2013. "The ordonomic approach to order ethics," Discussion Papers 2013-20, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    5. Glauben, Thomas & Svanidze, Miranda, 2023. "Globaler Agrarhandel: Robustes Sicherheitsnetzzur Reduktion von Hungerrisiken in Krisenzeiten," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 103(7), pages 491-499.
    6. Boyd, Naomi E. & Harris, Jeffrey H. & Li, Bingxin, 2018. "An update on speculation and financialization in commodity markets," Journal of Commodity Markets, Elsevier, vol. 10(C), pages 91-104.
    7. Pies, Ingo, 2014. "Wirtschaftsethik der Welternährung," Discussion Papers 2014-13, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    8. Hielscher, Stefan & Pies, Ingo & Valentinov, Vladislav & Chatalova, Lioudmila, 2016. "Rationalizing the GMO debate: The ordonomic approach to addressing agricultural myths," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(5), pages 1-10.

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    More about this item

    Keywords

    Futures Markets; Pricing; Risk Management; Futures Trading; Stock Indexes; Interest Rates; Futures Prices; Portfolio Theory; Hedge Funds; Foreign Exchange;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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