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.

On Buying Green

That sounds a lot like On Golden Pond. And, with a little change of emphasis, it could be… Buying Green, Putting Green… Village Green. I love the village green. Anyway.

Here’s a piece about consumers buying green products, how we’re doing, why we’re doing it, etc. I don’t know how you read it without it reading completely weird. I mean what are we talking about?

  • “Dark green” consumers tend to be older, more well educated, and more affluent than “light green” consumers
  • They also tend to care more about what is in “green” products (all natural, organic, non-toxic) and how they are made (such as by socially responsible companies)
  • “Dark green” consumers also tend to be more thoughtful about their purchases, often planning them ahead of time. “Light green” consumers tend to be more impulsive, often buying green products out of curiosity

See? Totally weird; important (for me) to remember that this is not what we’ve come to – it’s just where we are now. Companies? Yes we consider them. But what are we buying when we purchase things? Must our achats symbolize our moral purity? Wait, before you answer that – one possible scenario:

Are we buying convenience? Durability? There’s a difference between, let’s say, buying cleaning products and jeans. If you’re buying clothes, you’re rifling through a whole number of characteristics, none of which likely have to do with sustainability. Or do they? Better-made clothes last longer. We might buy less of them. It’s a way… wait a minute. We weren’t even trying to be green – we just, hey… there are different ways to accomplish similar goals. Are there other reasons? Ewww. Can we not drive, buy local, eat well or hang out clothes to dry just because we like to do these things?

Even or especially with clothing, we don’t have to call it green or anything. But we do. Because the choice will help the environment and that’s why we would buy it… well no, it isn’t. The environment isn’t the only reason we would buy things that last longer, or buy less of them. Or shop in our downtown instead of W*lmart, or from farmers at a market. We do these things because we like to do them. They are meaningful in their own right. It’s a corporate world and we need the slogans. But our needs here in the 1st world are actually quite simple and directly correlated to things we like: we like to do things that are enjoyable. And have gotten off the path to enjoyable things for exactly to demonstrate the power of advertising.

So these things of value, to us, these are the benchmarks. Now, consider all the other stuff that we buy, and whether you think ‘buying green’ is necessary to change any of them.