New York Magazine takes us on a tour of what lays beyond, after the capitalism runs out. That may sound hippie and/or conspiratorial, but facts is facts and the entire game has changed:
Making matters even weirder, contemporary capitalism’s dominant shareholders have no direct interest in the success or failure of the firms they own. All returns on their holdings get passed down the investment chain to their clients — households, governments, and corporations. Asset managers make their money off of their clients’ fees, not their firms’ returns. This diagram may make the hydraulics of the system more legible:
Of course, an asset manager that delivered consistently poor returns would attract few clients. And asset managers’ fees are calculated as a percentage of the current value of their clients’ assets. Nevertheless, add a fee-based business model to asset managers’ universal portfolios, and their interest in the performance of any individual firm they own becomes extraordinarily attenuated — even when they are the single largest shareholder of that firm (which is very often the case)!
This is not how capitalism is supposed to work in theory. And it isn’t how corporate governance has ever before worked in practice. To the political economist Benjamin Braun, the contemporary structure of corporate ownership is so novel and consequential as to mark a new era in economic history, the age of “asset-manager capitalism.”
Braun’s papers on this subject are fascinating, and nerds will want to read them in full. Mere dorks, however, may be content to consider the following four ways the rise of asset managers challenges conventional wisdom about how capitalism functions — and how it might be changed.
Cool graphic and the rest at the link. Removing market competition from the equation renders many of the other legacy levers moot. Even the ESG stratagem takes on a different tenor – what does promoting efficiency even mean when the owners of the means of production no longer prevail – when/if we default (curious wording) to a dirigiste model. They, ESG pressure campaigns may become more effective. Because frankly, christian soldiers, that’s what they’re talking about.
My thanks to a new friend who told me about the Letter to D’Alembert on the Theatre, written by J.-J. Rousseau in 1758. It seems that Jean D’Alembert wrote an article about Rousseau’s hometown of Geneva in which he talked about why the city needed a theatre, Rousseau struck back with alacrity on the effects of culture on morals and politics. It’s good stuff. A sample:
[partisans of the theatre say,] “Tragedy certainly intends that all the passions which it portrays moves us; but it does not always want our emotion to be the same as that of the character tormented by passion. More often, on the contrary, its purpose is to excite sentiments in us opposed to those it lends its character.” They say, moreover, that if Authors abuse their power of moving hearts to excite an inappropriate interest, this fault ought to be attributed to the ignorance and depravity of the Artists and not the art. They say, finally, that the faithful depiction of the passions and of the sufferings which accompany them suffices in itself to make us avoid them with all the care of which we are capaable.
To become aware of the bad faith of all these responses, one need only consult his own heart at the end of a tragedy. Do the emotion, the disturbance, and the softening which are felt within oneself and which continue after the play give indication of an immediate disposition to master and regulate our passions? Are the lively and touching impressions to which we become accustomed and which return so often, quite the means moderate our sentiments in the case of need? Why should the image of the sufferings born of the passions efface that of the transports of pleasure and joy which are also seen to be born of them and which the Authors are careful to adorn even more in order to render their plays more enjoyable? Do we not know that all the passions are sisters and that one alone suffices for arousing a thousand, and that to combat one by the other is only the way to make the heart more sensitive to them all? The only instrument which serves to purge them is reason, and I have already said that reason has no effect in the theater. It is true that we do not share the feelings of all characters; for, since their interests are opposed, the Author must indeed make us prefer one of them; otherwise we would have no contact at all with the play. But far from choosing, for that reason, the passions which he wants to make us like, he is forced to choose those which we like already.