Are Index Funds like Communism?

[pecunia]

From Wikipedia:

In political and social sciences, communism (from Latin communis, "common, universal") is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money and the state.

So, with Index Funds you have common ownership of the means of production.  Anybody can buy into Index Funds so there is no Social Class.  The money is gone after you buy the Index funds so you have the absence of money.

Do you see the similarities?

Index Funds and their returns can over a long span of time are supposed to have the possibility of leading you to Financial freedom.  Communism promised a lot of good things to people too.  If something sounds to good to be true, it often is to good to be true.

When I was a kid I used to read comic books.  The Communists were always the bad guys.  OK - Sometimes they were Nazis that had somehow survived World War II and didn’t seem to age much.  They taught us in school that the Communist countries were the enemies.  They wanted to take away your freedoms, your house, and even any chickens you may have in the yard.  Bad people.

There used to be a guy called Joe Stalin.  He was a bad man that was a communist dictator. He was called old bushy.  He had a big mustache.  I don’t think he owned index funds.

Am I on the track of something?

[Barbaebigode]

If everybody had to have an equal share of index funds, wanting it or not, you'd might be onto something. As it is, owning index funds is just another way of accumulating assets, IMO. In other words, the means of production are still in the hands of a few, each owning a different slice of the cake.

[maizefolk]

Yeah what Barbaebigode said.

... a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money and the state.

- There is also a distinction between common ownership of the means of production and individual ownership of the means of production. If you imagine a hypothetical society where each person owns three acres, one sheep, and a spinning wheel, everyone owns some of the means of production, but the means of production are not commonly owned (your sheep is your sheep, I don't have an equal claim to your sheep and to mine).

- Most people don't own mutual funds (or stocks generally), and among those who do, a small proportion of people own a large proportion of the stocks, so you clearly still have strong social stratification based on wealth. We can argue about the definition of class, and the kind of class Marx was talking about never really caught on to quite the same extent in the USA as it did in old europe, but this seems to be what current Marxists mean by class.

- Index funds pay you back in money for the money (dividends) for you use to purchase them. In addition you can always sell your shares back to receive even more money. So we still have money.

- We still have a state.

[EricL]

There are different flavors of communism.  All failures.  Except in the field of mass oppression and mass murder.  Mostly, I suspect because owning the means to production is not enough - you have to have the ability to lead and manage the means of production.  So in a capitalist state owning and running the means of production reverts to intelligent, ambitious, egomaniacal, oligarchs tone deaf to the plight specific to their workers and humanity in general.  In a communist state the owing and running the means of production reverts to intelligent, ambitious, egomaniacal, technocrats tone deaf to the plight specific to their workers and humanity in general.  Though with an helping of messianic self importance and mission even hard core capitalists have difficulty maintaining.

I'm happy to say Index Funds haven't much to do with all that.  "Ownership" is more technical and nebulous than specific.  An Index Fund holder can't seize a laser printer from Chrysler in exchange for her stock based on her part "ownership" of the company.  For good or ill the companies run themselves and statistically do well.

The only problem I have with Index Funds is they put large quantities of capital into companies that can become unethical or poorly managed.  A value investor (not speculator) who owns a handful of stocks and watches his companies like a hawk.  She sells them when the company's ethics and practices diverge from her ideal or complains loud and long at the shareholder's meetings.  If she owns enough stock someone might even listen to her.  She can fight to get the company run by either traditional or revolutionary practices based on if she owns Tesla or Sears stock.   Index Fund investors rarely know and/or care what the company does.  Nor do Index Fund investors or even the CEOs of Index Fund management have much they can do about them.  Bad companies eventually fall out of the S&P 500, a punishment to be sure.  But bad companies are never prevented. 

[waltworks]

Communism = everyone collectively owns the means of production, whether they contribute/pay in or not.
Index funds = you can buy a share of the means of production, but only with money. No money? You get nothing.

I'm not sure how those things could be more different.

-W

[John Galt incarnate!]

From Wikipedia:

In political and social sciences, communism (from Latin communis, "common, universal") is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money and the state.

So, with Index Funds you have common ownership of the means of production.  Anybody can buy into Index Funds so there is no Social Class.  The money is gone after you buy the Index funds so you have the absence of money.

Do you see the similarities?

Index Funds and their returns can over a long span of time are supposed to have the possibility of leading you to Financial freedom.  Communism promised a lot of good things to people too.  If something sounds to good to be true, it often is to good to be true.

When I was a kid I used to read comic books.  The Communists were always the bad guys.  OK - Sometimes they were Nazis that had somehow survived World War II and didn’t seem to age much.  They taught us in school that the Communist countries were the enemies.  They wanted to take away your freedoms, your house, and even any chickens you may have in the yard.  Bad people.

There used to be a guy called Joe Stalin.  He was a bad man that was a communist dictator. He was called old bushy.  He had a big mustache.  I don’t think he owned index funds.

Am I on the track of something?

Capitalism's freedom to choose is starkly  distinguished from communism's restrictions and compulsions so I do not think that index funds, can be likened to communism although they are owned by a large "collective."



.

[GuitarStv]

From Wikipedia:

In political and social sciences, communism (from Latin communis, "common, universal") is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money and the state.

So, with Index Funds you have common ownership of the means of production.  Anybody can buy into Index Funds so there is no Social Class.  The money is gone after you buy the Index funds so you have the absence of money.

Do you see the similarities?

Index Funds and their returns can over a long span of time are supposed to have the possibility of leading you to Financial freedom.  Communism promised a lot of good things to people too.  If something sounds to good to be true, it often is to good to be true.

When I was a kid I used to read comic books.  The Communists were always the bad guys.  OK - Sometimes they were Nazis that had somehow survived World War II and didn’t seem to age much.  They taught us in school that the Communist countries were the enemies.  They wanted to take away your freedoms, your house, and even any chickens you may have in the yard.  Bad people.

There used to be a guy called Joe Stalin.  He was a bad man that was a communist dictator. He was called old bushy.  He had a big mustache.  I don’t think he owned index funds.

Am I on the track of something?

Capitalism's freedom to choose is starkly  distinguished from communism's restrictions and compulsions so I do not think that index funds, can be likened to communism although they are owned by a large "collective."



.

Capitalism doesn't guarantee freedom to choose.  For truly free markets to exist, there cannot be barriers to things like slavery.  Slaves don't get to choose.

Communism is a failed form of a pure take on socialism, based on a reasonable idea - everyone should share and help one another.  Pure capitalism has about the same success rate, based on a reasonable idea - everyone should be rewarded for his work.  There's a reason why every successful economy on the planet is a mix of socialism and capitalism.  They work hand in hand to keep each other in check.