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According to Sanford Bernstein & Co., the meteoric rise of passive asset management threatens to fundamentally undermine the entire system of capitalism. The analysts warn regulators and politicians that the normal market mechanisms that facilitate an increase general welfare are at risk.
The social function of active management, in a capitalist society, is that it seeks to direct capital to its most productive end, facilitating sustainable job creation and a rise in the aggregate standard of living. And rather than be guided by the Invisible Hand and profit motive, capital allocation under Marxism is conducted by an oh-so-visible hand aimed at producing use-values that satisfy each member of the society's needs. Seen through this lens, passive management is somewhat tantamount to a nihilistic approach to capital allocation.
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