Debunking the Myth of Shareholder Democracy: Income and Wealth Distribution Effects of Asset Manager Capitalism

Albina Gibadullina, University of British Columbia

The idea of shareholder democracy, popularized by Margaret Thatcher, has been used by proponents of financial liberalization to argue that workers can materially benefit from the development of financial markets through individual share ownership in listed companies. The rise of asset management firms offering low-cost investment options through various index funds—termed asset manager capitalism—has further reinforced the notion that the working class can pull themselves up by their bootstraps through “sound” investments with no changes necessary in the structure of contemporary class relations. This paper responds to the empirical observation that while a greater number of people than ever before participate in the stock market (through pension accounts and other savings plans), the distribution of resources and the ownership of capital have grown more unequal over time. Interrogating the claim that the working class can escape their class position through individual investments, this paper examines the income and wealth distribution impacts of asset manager capitalism. Theoretically, the paper outlines mechanisms by which asset manager capitalism, while potentially increasing public access to better savings, offloads the financial pressure to save onto workers and contributes to wage stagnation and inflation, eroding workers’ savings. Empirically, the paper examines the class composition of the clients of the largest U.S. asset management firms and traces the historical changes in the U.S. wealth distribution (e.g. equity holdings and pension entitlements) and income distribution (e.g. wages, dividends, capital gains, interest, and rent), provided by the Survey of Consumer Finances and the Distributional Financial Accounts. The paper highlights the material limits of shareholder democracy and points to alternative forms of worker empowerment (from the creation of a public asset manager to the nationalization of enterprises).

No extended abstract or paper available

 Presented in Session 109. Consumption, Credit, and Wealth