The Battle for the Soul of Capitalism

John C. "Jack" Bogle, the founder and former Chairman of the Vanguard Group, is known for speaking his mind clearly and unequivocally.

In his 2006 book, The Battle for the Soul of Capitalism, he draws a sharp distinction between the way capitalism worked in the past, when it was controlled by owners, and the way capitalism works today, when it is controlled by managers.

While publicly traded securities markets distribute shares of ownership over a large population, thereby giving more people the opportunity to participate in the historic returns on equity, publicly traded markets diffuse ownership and control, making it difficult if not impossible for the legitimate owners of a public company to have a significant say in running the company.

The result, according to Mr. Bogle, is a "pathological mutation" of capitalism that erodes the most essential social requirement for healthy financial markets: trust.

The solution is for shareholders, fiduciaries, and government regulators to act solely in the best interest of the actual owners of the company.

Listen to his comments here, introduced by Princeton professor Burton Malkiel.

Mr. Bogle is also an advocate of a liberal arts education (c.f., my post on "Business and the Liberal Arts").