The problem in the paper may generalize to is, once you add leveraged distributors (index funds) to a system, the whole system coalesces around the distributors and ensconces their advantage, and in turn, their governance.

I'd ask, is it accurate to summarize the centralization risk of indexing is rooted in this same problem of once you abstract your product away from the physical asset source of truth, you are just managing a risk dynamic, where on one side you extract fees, but on the other you now have govenrance over it?

Distributors are gatekeepers in any market, and index funds are pretty standard distributor models. If you want to seize the means of production, you just have to promise them to someone else. It's kind of a brilliant example of all business ever, where if you want something, you become the person who sells the promise of more of it to someone else and you get your share in comp for the transaction, and you now have all the influence of your customer(s) over the companies you are buying from.

> Indexation, private equity, and globalization threaten to permanently entangle business with the state and create organizations – advisors to index funds and private equity funds – controlled by a small number of individuals with unsurpassed power. (italics mine)

Is this paper an early response to ESG? In the early 00's, I knew some people involved with an environmental (now, ESG) consulting firm, where their consulting thesis was green companies had an advantage because by being mindful of their environmental impact, they had more complete controls not only on accounting, but operations. Pre-total internet dominion, it was a way to instrument your company with line worker level controls, with some other concepts about creating efficiencies through aligned culture via shared ideology.

They were also involved in the Davos conference (which many progressive people had been protesting in the anti-globalization movement of the 90s, before WEF got smart and co-opted them) and I thought they were just greenwashing for oil companies, but time has shown it was much more ambitious than that.

> Indexation – like private equity and globalization – offers too many apparent gains to too many people to disappear, or even decline, on its own. For the foreseeable future, most public companies will have increasingly large amounts of their stock controlled by a small number of index fund providers. The agents of index fund providers pose one of the biggest new challenges for the future of corporate governance.

My comments rest on the premise that indexing is ultimately just another form of leverage and being a leveraged distributor. When as an individual investor you buy an index or a mutual fund, you are buying a commitment about exposure to the underlying, but you aren't actually owning the stock. The same goes for owning gold on paper where the physical asset has been resold (rehypothecated) several times over and trade in these paper commitments drive the price.

Thinking it through, it sounds very similar to exchange tokens on crytocurrencies today, where you don't have an enforcable claim on the assets of the companies or tokens you have accepted for your money, and all parties are subject to the exchange's kyc/aml governance. One could foresee CBDCs becoming "indexes," of baskets of underlying fiat and cryptocurrencies that are also a promise for exposure to the underlying - with the same distributors governance power over top.