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I have an oppressive communist country which doesn't have any free speech, secret police, a new supreme leader every few decades and obviously, a planned economy.

But somehow, the country is still very prosperous and self reliant. Markets are always well stocked, so you can pick and choose your meals within a certain amount of products, most families have their own free houses, there's no homelessness (although they are forced to get jobs if possible, unless severe disability) and people who do only work for 8 hours a day at max, even high ranking officials. Also there's a 3 day weekend plus 8 weeks vacation (18 for students).

The only problem is, music sucks (music needs to be approved by the government as "culturally enriching"), TV sucks (most TV personalities are friends and family for the leader), porn, tobacco, most alcohol (only beer only Sundays),drugs and smartphones are illegal, so are fattening foods such as fries, chips, sweets and other unhealthy foods, video games are only legal in arcades which are only open Saturday evenings.

Also in order to be anything more than a factory worker, farmer or service job, you have to be selected as "gifted" at 16 years old. Your job is selected for you and unless otherwise specified, you'll be doing it until retirement at 50. The gifted are also the only ones with access to the firewalled internet.

So this is a prosperous country full of well fed people with plenty of free time yet nothing to spend it on. So over time a prosperous black market has been established with its own currency (not sure how that's supposed to work yet, tiny specks of gold?) Where most things are smuggled in from more free countries, mostly this worlds equivalent to the US, or produced domestically in secret.

The most popular item by far are old smartphones, since its very easy to share files such as porn, movies, etc with them. A lot of Americans freely donate their old device to smugglers.

And when I say prosperous black market I mean its so gigantic that its cartels have started arming its own militia to protect its businesses from the government.

Now I had a new idea. Wouldn't a market like that profit from foreign investors or domestic investment from cartel leaders?

Can a stock market exist without protection from the government? If so how are rules for short sales or options enforced?

Would it even make sense for a black market to have a stock exchange?

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    $\begingroup$ A stock market for what participants? I see only one black market here. $\endgroup$ – Alexander Oct 17 at 17:59
  • $\begingroup$ You still need some starting assets for a smuggling ot production buisness $\endgroup$ – user2741831 Oct 17 at 18:05
  • $\begingroup$ Stock exchange is a synonym for securities exchange, and securities, in turn, are issued by market participants. Are you suggesting that individual black market traders would be issuing their own stock? $\endgroup$ – Alexander Oct 17 at 18:10
  • $\begingroup$ Yes, there would be system of some sort organized by someone (and thats what I'm trying to find out) that would make sure that securities aren't violated, dividends are payed out, etc, and punishes people for not following the rules $\endgroup$ – user2741831 Oct 17 at 18:12
  • $\begingroup$ The use of blockchain maybe pertinent for a secure exchange system without a central entity, because ultimatly, the value of the money is the one we give to it. However, in a communist system, so with the company owned by the state, things like stocks exchange make no sense, as this the exchange of "company part" $\endgroup$ – Cailloumax Oct 17 at 18:16
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I'm going to do something very unpopular with the business community. I'm going to equate the stock market with loan sharks, because that's what you're more likely to have.

You need some money, so you go to the stock market (loan shark) and negotiate terms. What he says is that he'll lend you the money you need in exchange for a percentage of your profits, forever. Congratulations, you've sold some stock.

Now what makes it a stock market is whether or not your friendly neighbourhood loan shark can sell on his share of your profits to a "colleague" for a cash lump sum. If he can you have a stock market. If he can't he remains just a loan shark.

So yes, a stock market of sorts can make sense, but remember where it comes from and god help anyone who decides that there isn't a share dividend this year.

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I see many misconceptions your idea.

Markets are always well stocked, so you can pick and choose your meals within a certain amount of products, most families have their own free houses, there's no homelessness

First of all, no dictatorship would allow plenty of free time for its people. Latins used to say primum vivere, deinde philosophari, which roughly translates as "first think about surviving, then about philosophy".

Well, if your people are well fed they would start thinking, and that's something no dictatorship is eager to allow, no matter if it is red, black, purple or whatever color it may take.

So, if you are a dictator, you make sure your people struggle every day and have no free time. All their energy must go to survive and fornicate as much as it is needed for reproduction. Mandatory training, meaningless activities shall be the daily bread for your people when they are not working.

The most popular item by far are old smartphones, since its very easy to share files such as porn, movies, etc with them.

Smartphones work over a network, which is not exactly something you can hide. And once it is there, it is hard to keep the government guys out.

its cartels have started arming its own militia to protect its businesses from the government.

So, you have a sort of Pablo Escobar and his cartel protecting their business, and you want someone to put his money in it? Well, people with lots of money want to make more money, sure, but also want to be sure that they can get them when they want them. And I suspect that no criminal cartel would be lenient in allowing opting out.

And without trust no sane investor would put money in any business.

Summing up, I don't think it could work.

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    $\begingroup$ Not necessarily. In late Soviet Union, people had generous vacation and sufficient free time. Another matter is that there wasn't much to do - free time activities were usually directed by government-sponsored organization. Which may have been one of the reasons for excessive alcohol consumption, which Gorbachev unsuccessfully tried to fight. $\endgroup$ – Alexander Oct 17 at 18:05
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    $\begingroup$ smartphones can do plenty of stuff without signal or wifi. They are small PCs after all $\endgroup$ – user2741831 Oct 17 at 18:09
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The closest "real world" counterpart to what you describe was the "Pirate Bay" network, which used cryptocurrency and plenty of encryption and other techniques to hide who was doing what from the authorities. However, cryptocurency requires plenty of computer resources to "mine" bitcoins, and a fully functioning and widely distributed internet for VPN's, TOR and so on to be functional (if there are only a limited number of closely watched network terminals, then figuring out who is on the network isn't that difficult). Even with all the resources of Pirate Bay, the US government still had far more resources needed to take them down.

The more realistic version would be prison black markets, where "shot callers" run various wings of the prison and currency is a combination of ability (who can actually get contraband smuggled in) and tokens like cigarettes as money. It is difficult to imagine how a "stock market" would work in that setting, although there would be a financial market of sorts (loans, loan sharking) and a form of "futures" market ("Pay a carton of smokes now to get in on next week's shipment of heroin, resell then for profit. Jimmy is getting the score so you know its good").

Of course outside of the physical and other issues of establishing a functioning market system is also the psychological aspects. The people are living in a low trust society (ubiquitous surveillance, secret police, the risk of being accused or denounced) and one with a low time preference (get what you need now before the Leader changes his mind or there is a shortage). Both situations work against the patient accumulation of wealth (even assuming the government won't confiscate it) and encourage immediate consumption, or hoarding rather than investing.

People not only won't have a stock market, but will not even fully understand the concept. This would be a great environment to release Nigerian princes and Ponzi schemers.

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