The socialization of capitalism

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:

[cool graphic]

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.

Oh La Vache! and other Mercurial Inunctions


And if you should require more than a thousand, maybe check out The Cosmological Eye by H. Miller.

I should say that ever since the dawn of history–all through
the great civilizations, that is to say–we have been living like lice.
Once every thousand years or so a man arises who is not a louse–
and then there is even more hell to pay. When a MAN appears
he seems to get a stranglehold on the world which it takes cen-
turies to break. The sane people are cunning enough to find these
men “psychopathic.” These sane ones seem to be more interested
in the technique of the stranglehold than in applying it. That’s a
curious phenomenon, one that puzzles me, to be frank. It’s like
learning the art of wrestling in order to have the pleasure of letting
someone pin you to the mat.

What do I mean to infer? Just this–that art, the art of living,
involves the act of creation. The work of art is nothing. It is only
the tangible, visible evidence of a way of life, which, if it is not
crazy is certainly different from the accepted way of life. The dif-
ference lies in the act, in the assertion of a will, and individuality.
For the artist to attach himself to his work, or identify himself
with it, is suicidal. An artist should be able not only to spit on his
predecessor’s art, or on all works of art, but on his own too. He
should be able to be an artist all the time, and finally not be an
artist at all, but a piece of art.