Ethical Analysis of Speculation

The purpose of this paper is to study whether speculative activities are ethically justified. The importance of this topic derives from the fact that many of the activities which configure a modern economy contain a speculative component. The analysis is based on the premise that the ethical quality of economic activities depends decisively on whether or not they create value for others. In studying whether this is the case in the case of speculation the article argues that speculation, increases the liquidity of markets, typically allows economic agents to take fewer risks and tends to move market prices closer to what reality justifies. After examining in more details the effect of speculation on the volatility of prices, the article concludes that the ethical assessment of speculation depends on the type of speculation involved