I was somewhat surprised myself to see Levy's embrace of mutual funds
myself. I guess there must be something in V. 3 of Capital that explains
all this.
More to the point is the political questions involved with "small investor"
psychology. One of the things that is bound to take place sooner or later
is the privatization of social security, just as it did in Chile. The whole
point of the mutual funds industry is to get people to accept the idea that
this is the only "realistic" way to prepare for retirement.
Another aspect of this is the need to get a broad section of the population
to accept the logic of the capitalist system. A small stock-holder who owns
20 shares of Citibank is likely to go along with the cutback of 5000 jobs
that is pending. Since this improves corporate profitability, the value of
the share is increased potentially.
This really gets ugly when you think about all the union retirement funds
that are invested in the exact same companies that are attacking them.
Frankly, there is no easy solution to this problem. It gets to the heart of
the way that the capitalist system functions. I suspect that when the time
comes for the ruling class to privatize social security, socialists will
really have to come up with some strong arguments.
Louis Proyect
At 04:29 PM 10/29/97 -0500, you wrote:
>Gerald Levy wrote:
>
>>Whether the losses are recovered or not by the mutual funds "investors",
>>before you consider whether these people are going to pull their $ out of
>>the market, you have to consider their alternatives. Given the rates of
>>interest on savings accounts, what choices do most of these small-timers
>>(including many retired working people) have? Some of those other
>>choices (like municipal bonds) might be undesirable for other reasons.
>
>Never thought I'd see reasoning like that on PEN-L. People should keep
>their money in stocks because they have nowhere else to go. This, even
>though no one can explain why stocks should continue to yield 3 to 10 times
>the rate of GDP growth. The whole thing is like a damn seance. If we just
>put our heads together, we can conjure the returns!
>
>Doug
>
>
>
>
