Have you ever noticed that there is a niche for every personal finance (PF) blog? There are millennial PF blogs, feminist PF blogs, Asian PF blogs, LGBTQ PF blogs, Mom PF blogs, get-out-of-debt PF blogs. It mirrors the fragmentation of Marxist followers. Every group that perceives itself as marginalized will create their own interpretation of Marx’s thinking and carry it forward. And so it’s the same with personal finance.

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You’re calling us Marxists!

I have to be careful I don’t insult people here, but if you removed the context of financial independence there is no doubt that those that speak passionately and eloquently about the above would be indistinguishable from Marxist thinking.

But here is where it gets interesting.

Marx could not see any way for our culture to break this cycle other than for the workers to rise up and overthrow the State. Marx envisioned a new state that would have public ownership of capital and then essentially migrate to Communism.

Karl Marx and financial independence

The man himself – the original mustachian?

It seems that those pursuing financial independence have found a new way. Over many years they are stealthily migrating from the proletariat to the bourgeoisie. They are changing class.

By turning their back on the cultural messages from the capital owners they are under-consuming and so able to accumulate some precious capital over many years and decades. At some point, they have enough capital to walk away from paid work, and are no longer part of the working classes.

At this point, they have to put their capital to use. A Marxist would have little choice but to keep their capital in cash, but early retirees are always looking for those investments that yield the greatest amount. They are looking for companies, factories, and businesses that will reward them with dividends, coupons and capital gains for lending them capital.

So, the early retirees have now become the rich bosses. They enjoy a life of leisure and put their capital to work. And it’s worth noting that their capital earns the most when the workers earn the least.

Marx was striving for a system where everybody wins; Financial Independence enthusiasts have found a way to game the capitalist system, but it is still a zero sum game. For every winner there is still a loser. For example:

All else equal, companies that pay their workers the least can reward their shareholders the most. Therefore pre-retirees suffer, and early retirees benefit.

High inflation generally rewards borrowers and earners but penalizes early retirees.

A market crash can benefit savers who are early on the ladder, but can be catastrophic for early retirees.

So Financial Independence has not solved the Marxist idea of class struggle, it still persists with inequality and conflict. But on our journey, we have found a new twist on an old problem.

How can I put this to use?

There is the old saying that you can’t understand the present without first understanding the past, and the philosophy of history can tell us a lot about our place in the world and the wider forces at work.

Without these insights you are a leaf that did not know it was part of a tree (Michael Crighton).

There is not much new in the world, new ideas are often old ideas recycled for a new generation, and that’s the case with financial independence. The mechanics of how to do it might be innovative, but the philosophical and economic ground that is covered is actually well-trodden. We don’t have to recreate a philosophical or ethical framework to understand financial independence since it exists in the structures that great thinkers of the past have shown us.

This article has been republished with permission from Actuary on Fire.