The Battle for the Soul of Capitalism

by Dual Income No Kids on March 28, 2007 · 0 comments

I’m snowed under with work at the University today, but I wanted to let our readers know about an interesting recent speech by John Bogle. In case you don’t know who John Bogle is, he is the founder of the Vanguard Group and is widely regarded as one of the grandfathers of index fund investing.

Bogle is still an active commentator on business and the state of capitalism in America. I’ve read some of his work. Bogle has the remarkable quality of being a clear communicator and an innovative thinker. Given his role in starting the index fund industry, I take his views seriously.

Most recently, Bogle has criticized the nature of America’s capitalist system. According to John, the correct disposition of money and labor is the soul of a functional capitalist system. Unfortunately, this soul has become corrupted. That is to say, American capitalism has shifted from an ownership society to a managerial society. Under a managerial society the fruits of business go to the managers of the business and NOT to the owners of the business. His evidence for this is the extreme and improper compensation paid to corporate CEOs and the failure of mutual funds to produce reliable long term returns.

Bogles’ speech is a terrific indictment of the mutual fund industry. I recommend you check it out.

Best,

James

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