I might well be very wrong here, but the main difference is that the other type of wealth-creation process actually creates more wealth (more products for everyone). While finance seems more like wealth-accumulation without the creation process - I'm aware that redistribution of resource in an efficient way is supposedly the part finance does in the wealth creation process, I'm just unconvinced of how much does that help, in relation with the return the finance sector on average get.
Finance created lots of value for the British Empire when they were colonizing countries - where they could raise money to buy navy ships and soldiers.
Finance does create value in the long run. However, it creates minimal value in the short run. Debt being traded in the short run is a zero sum game which does not create any value for the society. Considering that we allocate the best and the brightest people in finance, I would consider it creates negative value to society.
Aside from the VC's in the valley, what business in America runs without using debt in the short term today? Finance enables the day to day operations of the entire economy - I'd say it creates a ton of new wealth, in every segment.
This is kind of a circular argument, business runs with debt in the short term nowadays because our current system is being set up this way. It doesn't mean with some other settings, debt is an absolutely necessary (it also doesn't mean that the "other setting" won't be just Finance 2.0, however).
Finance is a circular argument, due to the nature of finance (see what I did there?).
It's fiat currency and fractional reserve banking - the initial bootstrapping of the system is a giant 'just trust us' and 'go with it' moment for society. Debt is easiest way to grow an economy, as loaning money helps create new wealth. It allows banks to turn $5 actual dollars into $15 actual dollars, without having to take $10 actual dollars from anybody. It's magic, but it only works when people trust the system to not disappear/default, and borrow money. Without debt, there is no growth of the overall economy, there is only shifting of reserves from point a to point b.
To make my point clearer, if we have a one world communist government, and the government can dictate exactly which resource goes where and which human does what, we probably wouldn't need debt for economic growth, right? (And to avoid any confusion, no I'm not advocating for anything like that, not even within a hundred mile close).
And in any case, I'm not saying that finance is absolutely useless, I'm just saying that the focus on finance (and the return they get) might be too much for our society/ market nowadays. Thinks of it similar to the manager and developer situation, you need product manager to make a bunch of developers to work together, but if you have a 10:1 ratio of managers/developers, then you probably can use a few more developers.
finance create more distributed wealth than real state, that is for sure.
And finance when done right is to generate business. That tech company wouldn't exist if it weren't for a loan, that weren't be if there was no money for the bank to invest...
What you are trying to describe the closed network banks use to scam everyone bypassing regulation and what not. such as dark liquidity and such. or microtrading.
anyway, illegal actions exist on all markets. not just finance. as mentioned above, finance is just the market the big criminals (0.0001%) are chosing at this time. Or do you think they dealt land, oil, etc under all the regulations as well in the past?
