The Battle For The Soul of Capitalism

Entrepreneurship is all about taking ownership in what one does.

It's about accepting the risks, taking the responsibility, and reaping the rewards.

Too often these days, it seems that students are taught it's one class of people who do the work and take the risks, and another class of people who reap the rewards.

And that's why "The Battle for the Soul of Capitalism: How the financial system undermined ideals, damaged trust in the markets, robbed investors of trillions--and what to do about it," is a great book for a freshman seminar. For it was penned by John Bogle--the founder and former chariman of the Vanguard Group--who actually founded Vanguard based on a paper he wrote as a student.

So it is that youthful idealism, when followed in entrepreneurial ventures, can rock the world.

Time is money, and thus any investment made in following passions and dreams ought to be owned by the investor. The risk taker ought always get the reward.

This fundamental entrepreneurial theme pervades Bogle's book, wherin he states that the financial industry needs to return to an "ownership" model, where investors--those who take the risks--reap the rewards.

Bogle's major theme is the exact same classical theme that must be taught in every class on entrepreneurship--"For better or worse, my youthful idealism--the belief that any truly sound business endeavor must be built on a strong moral foundation--still remains today, at least as strong as it was all those years ago."

This simple statement echoes of the classical ideals by which entrepreneurs founded and built America, and Bogle' s book is filled with great quotes. I'd like to share some of them with you today.

"When we should be teaching young student about long-term investing and the magic of compound interest, the stock-picking contests offered by our schools are in fact teachingthem about short-term speculation. And the biggest financial circus of all--today's incarnation of the Circus Maximus--is thegarish eight-story NASDAQ MarketSite Tower in Times Square, displaying stock prices on what is proudly billed as "the world's largest video screen." That display, it seems to me, is the visual paradigm that has become not only a circus, but a casino for speculators. Yet as Lord Keynes warned us: "When the capital development of a country becomes the by-product of a casino, the job is likely to be ill-done. (Italics added)

"Our society today, then, is no longer an "owenership society." It has become an "intermediation society," and it is notgoing back. In the ideal, if we all work long enough and hard enough at the task, it will become a "fiduciary society," one in which the citizen-incvestors of America will at last receive the fair shake they have always deserved from ourcorporations, our investment markets, and our mutual fund industry. Public, private, and individual retirement savings are the backbone of our financial system, but our intermediaries consume far too large a portion of whatever returns our finacial markets are generous enough to provide, with far too small a protion going to the last-line investors who put up all the capital and assume all the risks. (Italics added)

This book is my attempt to address one of those major threats: the remarkable erosion that has taken place over the past two decades in the conduct and values of our business leaders, our investment bankers, and our money managers. --Introduction, xvi

As St. Augustine suggested, it was self-love that lead to the fall of the Roman Empire. Gibbon's conclusion is expressed in this profound warning, "O man! Place not thy confidence in this present world!" --Introduction, xvi

Entrepreneurship is the center and circumference of our economic engine, and students need to learn the ideals by which the engine has ever run.

Whether studnets are heading of to Wall Street or to Main Street, the classical ideals will serve them well. It'll be fun book to teach!