A Dying World Full of Successful People

Capitalism can't save the world. In fact, it's killing it.

As we slide inexorably into climate disaster and the disintegration of the white west’s sociopolitical project, immense fortunes are being made.

This is not a coincidence. There is, in fact, a direct relationship between the aggregation of $10 trillion in capital under the management of a single organization and the failure of the United States to build mass transportation for the 21st Century.

And that relationship is rather obvious: Private capital pursuing private returns has not and will not pursue the summum bonum. Instead, like evangelicals placing their hope in an imminent parousia, the capitalist faithful live in vain expectation that individual greed will somehow produce public goods—and that it will do so before the system collapses.

Alas, it will not. Nor can it.

And Yet She Profited

There are lots of ways to make lots of money even as your fellow human beings suffer—especially if you already possess aggregated capital power and/or privileged access to the flood current of the great wealth-transfer tide now underway.

The popular imagination, of course, largely focuses on the billions in paper wealth accumulated by high-profile stockholders like Musk, Bezos, and Zuckerberg. But these fortunes are rather trivial in the scheme of things. Plus, those whose personal fortunes are concentrated in specific enterprises such as Tesla, Amazon, and Facebook actually have rather narrow interests when it comes to social policy.

The more problematic aggregation of wealth, I would assert, is represented by the dark alliance between the millions of individuals who comprise the 1% (and possess $46 trillion in personal assets) and the institutions to which those millions entrust those assets: Black Rock, Vanguard, Goldman Sachs, et al (the top 10 of whose cumulative AUM totals about $45 trillion).

Bear in mind that to be in the top 1% of US wealthholders, you only need about $4 million. So, individually, you’re nothing compared to Musk and Bezos. However, because you pool your assets with your peers through the top 10 asset managers, you and your peer group are collectively a force that dwarfs that of any individual.

Musk and Bezos, in other words, have relatively little sociopolitical power in terms of aggregated capital. The real power is held by the asset managers who serve the interests of the 1%.

And make no mistake. Regardless of their superficial differences in their individual political, social, and cultural outlooks, the 1% share a single unwavering agenda: continuous growth of their invested capital.

It is thus that agenda—not anyone’s views on climate, abortion, healthcare, human rights, racial justice, or international relations—that determines what will happen tomorrow in boardrooms, legislatures, courtrooms, schools, and our other institutions.

Those institutions clearly serve the 1%. That’s why the 1%’s fortunes that grew by $12 trillion (or well over one-third) during the pandemic, while the bottom 90% only saw an overall gain of 6%—a figure that’s distorted upward by the illiquid value of the homes they own.

Who Are These People?

The demographics of the 1% are non-trivial. The group is almost entirely white and largely comprised of Boomers and Gen X. They inherited an average of $4.8 million. And their wealth comes primarily from a combination of stocks, private businesses, and real estate.

For our purposes here, it’s worth noting that only about 30% of the 1% self-direct their investments. That means they count on Black Rock et al to allocate their wealth to stocks that will fulfill their investment objectives—whether those objectives are growth, income, or risk tolerance. This trust relationship underscores the power of the alliance between the 1% and the top 10 asset managers.

And rich boomers don’t monitor the corporations in which they are invested. So while as individuals they rarely own enough of Raytheon or Monsanto or Dollar General to be considered financiers of war or Big Ag or predatory retailing, collectively as a class that’s exactly what they do. And they will keep doing more and more of it as their collective share of the economy grows.

It’s worth noting too that while the notion of “ethical investing” has gained traction in financial services, 1) the overwhelming majority of investment mechanisms have no ethical component (and are thus non-ethical by default) and 2) even erstwhile ethical investments cannot explicitly sacrifice financial performance for the sake of any purported values.

Also, the monitoring of ethical investment standards varies widely in credibility. For, as we learned from the failure of organizations such as Moody’s and Standard & Poor’s to properly rate the risk of collateralized debt obligations leading up to the 2007 financial crisis, the self-policing of the investment community is inherently corrupt.

The 1%, in other words, do not finance what is good. They cannot intentionally finance a move to sustainable energy production or climate rescue. Their money will always pursue near-term returns—because those near-term returns are how their asset manager allies retain and grow their capital retainers.

These assertions hold true for both those who are wealthier than the 1% and those who don’t make the 1% cut. Once you get up to about $25-20 million, you join the 0.1%—also known as Ultra High Net Worth Individuals (UHNWIs). This is where you find CEOs like Pfizer’s Albert Bourla and politicians like Nancy Pelosi.

These UHNWIs have their hands directly on various levers of power, so they are not passively dependent on their asset managers to advocate for their financial interests as the rest of the 1% are. Instead, they work directly with asset manager leadership to support the interests of entrenched capital. This is why, for example, we see Goldman Sachs alums like Steve Mnuchin and Tim Geithner assume lead roles in US economic policy—and why Wall Street give billions to politicians.

By the same token, even those whose net worth is under $4 million cumulatively make a significant contribution to the power of corporate entities that have a legally mandated fiduciary responsibility to return maximum vale to their shareholders—rather than consider the broader social and environment impacts of their behaviors, which are technically considered “externalities” and therefore not relevant to their decision-making on any level (except insofar as they may incur legal and/or reputational risk).

Why Does It Matter?

So who cares? Why should anyone be concerned about what people do with their money? Isn’t the freedom to invest how one wishes an absolute right in a free society? Wouldn’t any attempt to constrain wealth’s pursuit of more wealth undermine the pursuit of happiness enshrined in the US Declaration of Independence—and cherished as a common value by all right-thinking human beings?

Well, it matters profoundly for several reasons, including:

• Personal freedom does not extend to harming others. When you own stock, you are essentially requesting that an organization pursue profits—or, more precisely, an increase in the value of that stock—above all else. So you are incentivizing harms. Some of those harms entail adverse environmental impact. Some entail paying workers lower wages. Some entail price gouging. But if you own stock, you are basically saying “Make me some money, no questions asked.”

• Personal wealth-building provides cover for underlying social malaise. Studies show that people who reap capital gains believe that “the system is working.” That’s because the system is working for them—and, most likely, for the people and neighbors they know. And if you imagine that the system is working, then it’s that much easier to imagine that people are poor or homeless or jobless or without healthcare because they are doing something wrong—rather than because the system itself is failing your fellow citizens. It’s also easier to imagine that an existential crisis can be addressed by a change of policies rather than a complete overhaul of the underlying system.

• The growing concentration of personal wealth makes life worse for more people. It’s easy to believe that you’re getting richer because you’re smarter or work harder. But the empirical evidence reveals that this is not the case. Our system of private capital investment inherently favors those who already possess aggregated capital. Sure, there are anecdotal exceptions. But anyone who hitches their personal star to private capital is basically saying “I’m getting mine and fuck everybody else” to the rest of the world. The extent to which we allow that to happen is the extent to which we collectively destroy ourselves.

These are just some of the reasons why it’s problematic to keep allowing individuals to pursue individual wealth without reasonable—and why we need to act swiftly and decisively to end this folly.

What’s The Alternative?

There are plenty of alternatives to capitalism. In fact, to believe that in capitalism mankind has discovered the best of all possible economic systems—and has therefore reached the end of economic history—is to fundamentally deny the entire lesson of human history itself.

We are constantly evolving in response to changes in the environment. Capitalism began when Dutch and British seafaring merchants needed a way to finance their expeditions—which entailed large upfront investments in order to secure large profits from goods obtained from faraway lands. This same approach to capital investment metastasized during the Industrial Revolution, because manufacturing at scale likewise entailed large investments to produce large returns.

The world today is vastly different. We produce wealth in totally different ways. And we no longer view people being vassals to a small number of powerful overlords as the natural state of things. Nor should we. The ways and means exist today to democratize the wealth of nations and ensure that everyone partakes of what everyone produces.

We need the fruit picker and the teacher as much as we need the CEO and the banker. We may even have become rational enough to recognize that the former are more important to our lives than the latter. We can therefore apply our evolved rationality to the distribution of wealth so that we make the quality of human life subject to reason, rather than to mindless economic forces that we empirically observe to be destructive.

We also face crises that a system based on individual money-driven decision-making alone can clearly not address. So, again, we must bring greater reason to our collective allocation of resources than that which a mindless and demonstrably destructive allows.

And we don’t have to be limited to that which has come before. Many people scoff at the very suggestion that there may be an alternative to capitalism, because they can only point to some other country’s failure at some time in the past.

But those pasts are not our future. Our technology, our notions of justice, and even our very understanding of the physical universe have all evolved tremendously. Would we repeat the two global wars of the last century just because that’s what the world order once dictated? Would we accept one race enslaving another for free labor just because that’s how we grew cotton in the antebellum South? Do we want only a small portion of our populace to be literate—and keep knowledge locked away in private libraries that only the few could afford?

Of course not. We don’t go backwards to be ruled by bloodline monarchs or to still try to cure the sick with leeches. So why not move forward to a new model of economics? Why not progress beyond today’s vicious income disparity—and the unmitigated financial self-interest that drives it—so we can save the earth, rescue the poor, and neutralize the conflicts that might otherwise drive us to another world war?

What exactly is it that we fear? Can you name it? And if you can name your fear, can that fear withstand the clear light of reason? Is what you fear more awful than the future towards which we’re headed now? Is being rich really more important than being alive? And should anyone be destitute when we have $46 trillion to share?