Société Générale's veteran strategist Albert Edwards, recognized for his “alternative view” within the firm, suggests that the recent political victories of individuals like Zohran Mamdani indicate a self-inflicted backlash from the corporate world against “greedflation.”. Edwards, whose financial career began in 1982 and who has long diverged from his investment bank's “house view”, has cultivated a dedicated following for his critical stance on market stories. He once expressed shock at “greedflation,” or unprecedented profit margins amidst post-pandemic inflation. He characterized this situation as the “end of capitalism” of 2023, a viewpoint he reaffirmed in a discussion with Coins2Day.
TL;DR
- Albert Edwards links Zohran Mamdani's political wins to corporate greedflation backlash.
- Edwards criticizes unprecedented corporate profit margins during post-pandemic inflation.
- He argues corporate excess fueled political instability and public outrage.
- Edwards believes young people's exclusion from housing creates intergenerational strife.
At that time, Edwards stated, inflation was commonly attributed to raw material costs due to the Ukraine conflict and the labor market. Few believed profit-driven inflation was a factor, but he held a contrasting perspective: “This is unprecedented.” He noted “when unit costs rise, always, unit margins fall, always, in history.” He explained that this outcome was avoidable and occurred because of substantial government stimulus that “companies could get away with doing it, using [inflation as] cover.”
This money printing and fiscal spending led to a “bonanza for the corporate sector,”, causing corporate profit margins to skyrocket “off to infinity” post-pandemic. Edwards pointed out particular industries that saw immense gains, referencing a St. Louis Fed study illustrating corporate profits' share of national income dramatically increasing since the inflation surge, a stark contrast to global trends.
This period of corporate excess laid the groundwork for severe political instability and public outrage, Edwards argued. Just look at the election in New York, Edwards said, which was all about the cost of living. Zohran Mamdani’s election is “an indication that this still is a big issue.” Edwards agreed “affordability” is a major topic of the moment, along with the U.S. Housing market: “It stands out as, like, what’s going on?”
This latest twist in the populist turn isn’t necessarily something to celebrate, Edwards said. As an economist, he said he considers Mamdani’s policies, deriving from his democratic socialist background, such as rent controls and price controls, to be “lunacy,” having experienced them himself in the 1970s. Still, dysfunction in capitalism means that society will “come back full circle to this.” The increasing intergenerational strife, driven by young people being shut out of the housing market and out of wealth concentration, has created a primal sense of betrayal, especially among Americans who no longer feel they are better off than their parents.
Edwards spoke as the first-time homebuyer encountered an average age of 40 years old,, a clear indication of how the predominantly young electorate that supported Mamdani is excluded from the housing market. The Amherst Group CEO Sean Dobson, a major institutional property owner in the U.S., recently projected that the post-COVID economic conditions that so angered Edwards resulted in “we’ve probably made housing unaffordable for a whole generation of Americans.”
You reap what you sow
Returning to his critique of capitalism, Edwards contended that Mamdani's election was “part of the consequence … the corporates, by being excessively greedy, hence ‘greedflation,’ have laid the seeds for their own destruction—and backlash.” Edwards further stated that “more and more people are identifying corporate excess.”
Addressing what he termed “intergenerational strife,”, Edwards expressed his belief that this is “the first generation where people are not seeing themselves as better off than their parents were.”. In today's capitalist landscape, “young people can’t get on the housing ladder, they see wealth extremely concentrated … it takes the incentivization out of the economy if young people don’t feel they’re participating.” Is evident across the board.
Edwards's point here aligns with some unexpected allies, as Peter Thiel himself has voiced concerns about this incentivization issue for a considerable time. Mamdani's victory appeared to unsettle the right-leaning faction within Silicon Valley, with Chamath Palihapitiya expressing Peter Thiel’s 2020 email to Mark Zuckerberg and Marc Andreessen, cautioning against a “broken generational compact” and explaining, “if one has no stake in the capitalist system, then one may well turn against it.” In a subsequent conversation a few days later, Thiel told The Free Press, “if you proletarianize the young people, you shouldn’t be surprised if they eventually become communist.”
On the left wing of legal thought, Columbia Law School professor Tim Wu recently told Coins2Day that he wrote his new book, The Age of Extraction, about a similar feeling. “My understanding of America is that it’s the place where things are supposed to get better,” Wu said, but instead we’re living through a time with “an economy-wide problem” where “everything kind of just creeps. It’s that weird feeling of something you like becoming worse.” He added that American politics right now are “very angry” and “economic resentment,” but also a general feeling that “we let things go a little too far” and we “just kind of lost touch with the tradition of broad-based wealth that was the American way.”
On the subject of greedflation, Edwards was philosophical but insisted that what happened in 2023 was a mistake. “Okay, I can understand this is capitalism, this is how it works” he said about pursuit of the profit motive, “but if the government doesn’t step in,” then a backlash is bound to happen. Edwards declined to say this was a particularly Democratic or Republican issue, but he said “there’s a reluctance” in American culture to dictate to the corporate sector. At any rate, the consequence of it is “there’s a day of reckoning coming in,” he said.
Edwards, who is also convinced artificial intelligence (AI) is in a bubble, said he views his role as similar to “Caesar’s slave,” referring to the story from antiquity about the Roman emperor ordering someone to follow him around and always whisper in one ear: “You are mortal.” (This is also commonly referred to by the Latin phrase “memento mori.”) Edwards said he sees his role as similar, for the often overly optimistic market. He warns while the macro-level excesses might not be visible in aggregate, drilling down reveals “things are pretty crappy under the surface.” The political reaction embodied by Mamdani’s focus on affordability is a clear sign that the economic consequences of corporate greed are now driving mainstream political change.
Edwards concluded there’s a fitting phrase for the dysfunctions of capitalism in the 2020s: “You reap what you sow.”