Marx my words

It was intensely frustrating that the 30-year experiment in economic conservatism could collapse so spectacularly and yet liberalism seemed to have so little to offer as a counter ideology. Some occupiers decry what they call "neo-liberalism", by which I think they mean post-Carter moves by Democrats to liberalize international trade and moderate regulation, but that's a painfully simplistic argument. The problem with the left isn't that it has evolved improperly, but rather that it hasn't evolved enough.

Too much leftist thinking relies on an outmoded Marxist framework where the most significant economic dynamic is a fundamental clash between the owners of capital and the owners of labor. But things have changed in the 140 years since Das Kapital was written, including a shift in business structure to shareholder-owned corporations. The result has been a complete dissolution of the distinction so crucial to much leftist ideology. Consider, for example:

• According to research sponsored by the Centre for Economic Policy Research, as of 2006 roughly half of all stock issued by US corporations was owned by workers, primarily through pension funds and 401(k) plans. This is more than a ten-fold increase since 1945.

• CALPERS, the pension system for California state public employees, has a $200 billion investment portfolio, bigger than Berkshire Hathaway's market capitalization, by comparison, and is broadly recognized as "a recognized global leader in the investment industry, and "one of America's most powerful shareholder bodies."

• Pension funds are major investors in the sort of private equity and hedge fund vehicles that some make hay out of vilifying as job destroyers and market manipulators. It's hard to get data on these assets, but consider that the membership of the ILPA, a private equity investor advocacy group that boasts of representing over $1 trillion in private assets, is over 60% pension funds and university endowments. 

Workers hold a significant ownership stake in corporations, and their retirement savings are driving much of the financial activity that seems to upset some would-be reformers. I'm not arguing that Marx's theories should be entirely dismissed - I don't have the energy or smarts for that - but the left would do well to broaden its intellectual underpinnings. One notable attempt to do so is in Cornell economist Bob Frank's highly recommended latest book, in which he makes a compelling argument for the explanatory power of Darwinism to understand our economic state of affairs.