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Is Shareholder Capitalism bad for us?
What if “Investor Capitalism” – where the wizards of Wall Street control large sections of the economy – is bad for average North Americans? What if our obsession with shareholder value at all cost is actually culturally based and not somehow created by the “invisible hand” of markets?
Karen Ho, professor of anthropology at the University of Minnesota, asks us to consider these questions in the latest episode of the Mindful Wealth Podcast.
Who’s Invisible Hand?
In conventional thinking, “markets” are beyond culture. Capital is a force of nature, which – like water – flows according to laws a lot like gravity (Adam Smith’s “invisible hand of the market”).
As an anthropologist, Dr. Ho’s job is to make it apparent how we, as fish, may be unaware of the water.
She wants us to think differently.
In her book Liquidated, Ho argues that it’s the invisible hand of culture – and with it politics and policy – that precipitated the financial crisis of 2008. The crisis was – she suggests – spurred on by short-term value-seeking of Wall Street culture.
Worse, the causal links of how investment banking has shaped today’s capitalism is actually camouflaged when we treat capital and markets as if they were laws of physics. If we see markets as run by “an invisible hand”, we miss the fact that economic decisions and policies are produced by cultured actions. If Wall Street celebrates value extraction, deal-making, and employment precarity, is it any surprise that these are the very results written across our economies?
If we continue to outsource the managing of pension money to investment bankers, while at the same time believing that its “the market” and not a certain set of cultural practices that color corporate decision-making, we’re doomed to fall prey to worst aspects of today’s Shareholder Capitalism.
Perhaps greater understanding of how culture – especially that of Wall Street – interacts with markets, will help avoid future crises and growing income disparities.
A Way Forward
Ho’s solutions are essentially mindful ones. If we begin to see the “invisible hands” – in this case Wall Street culture –that shape the type of capitalism we run, we gain the power to question and alter the status quo.
If we see financial crises, markets and capital as forces of nature, we’ll be buffeted by the short-termism and financial crisis-provoking decisions made on Wall Street.