Post by
Experienced on Sep 03, 2024 6:04am
Marxism - Investment Implications
In recent posts here and on other Boards, I have talked about "The march towards Marxism" as a concern for investors. Yesterday at dinner, my wife and I got talking about it and my wife asked me a simple (and at the same time profound) question -
"So why should we be worried about a movement towards Marxism?"
At its core, Marxism believes that the only real difference in the world is between owners and workers. This means that national identity (nationalism) is an artifical concept to Marxists.
Soooo...for investors what does this mean?
1.....it means a continuation of "open borders" which we have seen under Biden and will continue likely to an even greater extent under a Harris Administration despite all the costs to US taxpayers and the implications for the national debt, not to mention fundamental law and order and security.
2....a redistribution of wealth from owners (the "haves") to the "havenots". This means higher taxation of those who produce the wealth and employment (compounded by Point 1 above in terms of national debt). It also means a higher level of Government interference in the business ecosystem through greater regulation. This is in sharp contrast to the famous book by John Rawls in the 1960s called "A Theory of Justice" which he said (and I am oversimplying) that as long as the increase in wealth in a certain group advances the well being of others then it's ok and just. Or in other words as long as the standard of living for all increases then the system is working fine.
So from Point 1 and 2, the concern about Marxism, and again to oversimplify, is that it will result in lower productivity (more inefficiencies), higher levels of regulation, lower profits for business and higher national debt and a detioration in the "Rule of Law". It also means, following John Rawls, that we will see a decline in the standard of living which is not a good thing for individuals and for investors.
None of these things are good for investors and will result in lower growth and potentially leading to stagnation and worse yet, negative growth (read recession/depression).
So in very simple terms, "The march towards Marxism" will result in lower long run returns for investors and on the one hand greater risk for investors as the Government will substitute for the natural business ecosystem so the Government will increasingly be in the business of picking "winners" and "loser". On the otherhand, this presents opportunities to find high growth companies with solutions to government screwups. BUT, the problem here is that finding such companies is not easy to do and often presents investment risk as well since in many cases they are smaller companies which could fail.
Anyway, some food for thought. What you do about it is of course up to each of you. I encourage you to think about this and what that might mean for you in terms of you achieving your investment objectives. At a minimum, it will provide a lense (or filter) for you to evaluate events and increase the probability of making better investment decisions.