At 5:48 PM 7/15/96, L. Detweiler wrote:

this reminds me of something else. the stock exchange as it now stands is not the paradigm of true capitalism as some would have others believe. in fact I see it as the paradigm of what might be called "middleman capitalism", a version of capitalism that is rapidly diminishing and disappearing in the onslaught of the information age.

essentially, in the new version of capitalism, middlemen who do not *add*value* to the delivery of a product are going to be increasingly cut out of the loop. I am not saying *all* middlemen will be cut out, but many that now exist will be.

I agree with Vlad/Larry's points, and this is in one of the other recommendations for the NASDAQ, that it be even further electronic-mediated, with more information made available on bid/ask spreads. The rise of discount brokers, who provide essentially no advice to customers, is part of this "disintermediation." Ditto for electronic trading systems, such as Accu-Trade.

in my opinion, the *stock*broker* as his job is now defined is in many ways the classic middleman that does not necessarily add value to the information that flows through his hands. if he is just an agent for carrying out the demands of clients, then I'd say that this role is going to disappear as markets become more automated, or rather capital moves toward stock exchanges that diminish this overhead. however, there are many brokers that add far many more services than mere blind investor response, such as analyzing company profitability, forecasting, etc-- these are adding value imho.

Agreed, and this is already happening.

I think the end result of the information age is going to be something that could be regarded as the ultimate capitalist market-- something that eliminates all "unnecessary" middlemen. I suspect the stock exchanges of the future will *not* be regulated because they *cannot* be. it will be a matter of buyers and sellers choosing the systems that best suit them regardless of what governments feel is appropriate, fair, or whatever.

I emphatically agree! There is little need for regulation in this new environment, and "reputations matter." And regulation is becoming problematic. (To cite one example. Some are calling for registration and regulation of "investment advice," which is largely unregulated in the U.S. today. That is, I can self-publish a newsletter, "Tim's Stock Picks," and the First Amendment says this can't be restricted (Caveat: But I can't sell "Tim's Legal Advice," "Tim's Earthquake Safety Advice," or "Tim's Medical Advice" to clients...go figure). Some want investment newsletter writers "held accountable." Great, so I'll move my newsletter to Anguilla or Monaco. What do they do then? Stop U.S. subscribers from getting them? Set up postal stings, where illegal investment or medical advice is treated as illegal child porn from Denmark? Use key escrow to monitor received Net traffic?)

its interesting how the restrictions on stock buying and selling are becoming quite orwellian in the way they are designed to limit mere information transfer in many cases, it seems. TCM has written about this far better than I could in previous posts. ("inside trading" restrictions).

Again, I agree. I won't quote anymore of Vlad/Larry's piece, as I agree with it all. (Vznuri should probably "reclaim" his Detweiler personna, so that such good messages as these accrue to his True Name's reputation.) --Tim May Boycott "Big Brother Inside" software! We got computers, we're tapping phone lines, we know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Licensed Ontologist | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."