Analyse the impact of the derivatives markets/instruments on economic growth
Assume that you have an opportunity to visit a civilization in outer space. Its society is at roughly the same stage of development as our earth society is now. Its economic system is virtually identical to that of the earth, but derivative trading is illegal. Briefly introduce, explain, compare and contrast this economy with the earth economy, emphasizing the differences due to the presence of derivatives markets/instruments in the latter.
First of all, derivatives can be seen as a very useful tool to hedge your positions. Doing so, you can protect your investments depending on your risk profile. Assuming that derivatives where illegal, a shipping company, for example, would not be able to plan the capital that should be available in order to schedule a future purchase of oil leading to increased operational risk.
On the other hand, if you are a speculator/risk-seeking investor, being able to invest your capital solely in derivatives even without holding or wanting to use in a productive manner the underlying asset, you could generate huge profits (which is good...) but also huge losses! Therefore, assuming that most investors are risk-seekers and pursue easy and short-term profits, derivative products tend to increase market volatility and uncertainty/unpredictability.
To conclude, personally I would prefer to visit "a civilization in outer space" as you mention, where investments in derivatives are allowed only when used as a hedging instrument from rational investors and I would prefer investments in derivatives to be illegal when used as a bet to beat the market, which is the case when an investor takes a long or short position without holding or wanting to use "productively" the underlying asset.
So far there is a lack of specialized research on the entire path and the law of the evolution of green economy modes, especially studies on its future trend. Some studies have been done only on its sub-process, in which there are some shortcomings such as overlapping and incomplete classification of economy modes, as well as the lack of mechanism...
The contents of the PowerPoint are as follows.
1) The capitalist economy collapses
2) The new society is a social solidarity economy
3) The center of the system is cooperatives
4) For-profit companies should be converted to worker cooperatives
5) Cooperatives can compete with joint-stock companies if they form "solidarity systems."
6) The social so...