[defo_nonconvex]

Tiny country by land mass maybe, but you know the Dutch East India Company's peak market cap was (inflation-adjusted) 8x10^12 USD, right? If you don't understand the economic impact of early resource abundance, on the ability to construct education systems, universities, professional organizations, infrastructure, and industry, and the 'pool of available talent', then pick up a strategy game.

Otherwise just Rand-ian codswallop.

[rsj_hn]

Yes, but those nominal amounts are just paper. They are a mechanism to marshall labor, nothing more. They don't correspond to real resources. This is an interesting fallacy -- I remember playing Freeciv, and you would get 1000 coins in the bank, and if you wanted to speed up building of some monument, you just spend the coins and poof, all these things get built, even if you don't have the labor or real resources to do it. The world doesn't work like that. In the real world, if you try to cash out your stock and sell it to build something without the real resources to do it, all that happens is inflation goes up. But a country really only has the labor and land and domestic equipment that it has, and it needs to use that to build all the dams. You can create paper claims valued at hundreds of trillions of dollars if you want, but it doesn't add a single hour of manpower to the country.

[rsj_hn]

You are confusing real and financial resources. Financial resources make sense at the micro level. If I have $100 and you have $10, I can purchase ten times the real resources that you can. But

1) that relative advantage doesn't correspond to an absolute advantage that can be compared across nations. A nation with ten times the market cap of another nation doesn't have 10 times the real resources. It may just have a more developed stock market, or a more financialized economy, or a lower discount rate, or more optimism for future earnings.

2) Neither does market cap mean anything for the nation as a whole. If I have 10 times the wealth of you, I can buy 10 times as many real resources as you can, but together we can still buy only all the real resources available -- when market cap goes up, that doesn't mean more labor is available to purchase, or the nation has more skills or more equipment. It could just mean that there is more optimism about future profits, or a lower discount rate. Market cap doesn't measure the real resources of a nation anyway -- it's a measure of the discounted flow of earnings, but not of the gross value add of the economy. For example, if labor costs go up, profits fall and market cap shrinks. But the real resources do not change -- the labor supply does not shrink. Just the relative price of labor and capital changes. These relative prices can fix the market cap at any point between zero and infinity (exclusive). All by tweaking the risk free borrowing rate, risk premium, and relative prices of labor and capital. You get zero information about the total size of real resources by looking at market cap, all the information is about relative prices for a given set of real resources. The same is true for the total amount of paper claims in an economy -- they give no information on the size of real resources available. They are dominated by relative prices. The proof of this is exactly the fact that the Dutch had such huge market cap when their real resources were so small.