Welcome to This is Fine(ance Capital)! What follows is the outgrowth of many conversations between the two of us – a union researcher and a labor historian – that have centered on one question: what’s been happening on Wall Street in recent years?

The short answer to that question is this: massive asset managers – above all, the so-called Big Three of BlackRock, Vanguard, and State Street – have become the dominant players in the financial system and, indeed, in the economy more broadly.

What do the Big Three do? They provide a basic financial service to investors: in exchange for a fee, asset managers invest their clients’ money in financial markets – for the most part in the stock market (aka in “public equities”). That sounds innocuous enough – until one understands just how much money we’re talking about.

Take BlackRock. By the end of 2024, this single firm possessed $11.5 trillion[1] in assets under management (AUM). Adding in Vanguard and State Street, the Big Three together manage more than $26 trillion.

What does that amount of money look like in practical terms? Collectively, the Big Three are either the largest or second-largest shareholder of almost every company listed on the S&P 500 - which is to say, of the biggest corporations of the world. On average, they together control more than 20 percent of each of those companies. That is, for example, about 25% of Chevron; 21% of Costco; 20% of General Motors; and so on. Not since large banks dominated the US and German economies in the late 19th century and early 20th century have we seen a fusion of ownership and control of corporations on a scale that warrants the moniker “finance capital.”

Meanwhile, so-called alternative asset managers have also grown at a rapid clip in recent decades. Alternative asset management is a broad category that includes private equity, real estate investment, hedge funds, and more. Blackstone, the largest alternative asset manager, now oversees more than $1 trillion. While not operating on the scale of the Big Three, alternative asset managers collect much higher fees per dollar of AUM and play an important role in modern capitalism. Since the leveraged buyout boom of the 1980s, the threat of being acquired has enforced discipline on corporations. This, in turn, reinforces the power of shareholders, including the Big Three. More recently, alternative asset managers have expanded further into infrastructure (e.g. airports, utilities, pipelines) and built out lending capabilities in the wake of bank retrenchment.

Complicating our picture, BlackRock has engaged in a series of acquisitions – Global Infrastructure Partners, HPS Investment Partners, and Preqin – that place alternative asset management under the same roof as its traditional business model. The implications of this development, and other attempts to blur the line between publicly traded markets and alternative asset management, warrant further study.

What Does this Tell us about Capitalism Today?

There is a lot of debate as to what all of this means, but most observers would agree on the following three features of the new finance capital that impact corporate governance:

For certain asset managers, “exit” from any given company is not an option. In the past, investors dissatisfied with the performance of a given company simply sold – or threatened to sell – their shares. The Big Three do not have that luxury. Given the scale of their positions, dumping shares would have adverse effects on the entire market - and this, in turn, would hurt their overall portfolios. Moreover, among the key products they offer investors are cross-market index funds, which by design include just about every company.[2]

For the Big Three, their index funds – mutual funds and exchange traded funds (ETFs) – are constitutive of a “passive investment strategy” among asset managers. In other words, these firms do not actively try to “beat the market,” or bet on winners and against losers. Instead, they are committed to holding the widest range of assets for the long-run.

Both of these previous points result from the status of the Big Three as “universal owners.” Because of their exposure to the entire publicly traded market, and because they operate on a fee-based model, asset managers have an interest in seeing share prices continually appreciate in value. For them, the function of the stock market is not to raise capital with which specific businesses can undertake expansion programs and the like (e.g. fixed investment). Rather, it is simply to enlarge the wealth of investors.

Beyond these three points, however, there are various ways to make sense of this economic order. Some scholars have contended that the position of asset managers as universal owners incentivizes them to encourage anti-competitive behavior. Their goal, from this view, is to maximize industry wide profits and not to have any individual firm get ahead.[3] Alternatively, these asset managers should be motivated to use their power to tackle systemic risks, like climate change, that threaten their portfolios as a whole.[4]

However, there are potentially constraining forces. The inability to exit investments makes the Big Three’s power in the realm of corporate governance highly visible, and these asset managers particularly sensitive to regulatory politics that could threaten their ability to expand their AUM.[5] Additionally, some scholars have questioned whether finance capital’s power is anti-competitive at all. They stress the degree to which financialization within the corporation and developments within the asset management industry have accelerated the mobility of capital – and thereby increase competitive pressures faced by each corporation.[6] In the debates above, we can also see hints of how the power of asset managers impact broader economic and political systems.[7]

What does this mean for labor and the broader progressive movements?

The objective of This is Fine(ance) Capital will be to track ongoing developments among asset managers to shed light on particular ways in which the new finance capital works and how it is integrated with processes that drive exploitation, ecological degradation, and scale back the role of the public sector.

The power of finance within the U.S. economy has been on the rise since at least the 1980s. While this rise has partly been at the expense of corporate management’s power, finance’s ability to enforce discipline on the corporation has also strengthened management’s hand vis-a-vis labor. Labor in the U.S. initially responded to finance’s rise by attempting to ride the wave of shareholder primacy – using its growing pension funds to speak as shareholders, filing shareholder proposals and using other corporate governance mechanisms in hope of nudging corporations to act responsibly. Over time, the focus of labor and other movements has shifted to larger pools of capital (public pensions) and the asset managers that ultimately intermediated them, but the strategies have largely accepted the structural confines of asset-based retirement systems. As a result, we’ve taken on the role of the proverbial frog in the boiling pot: picking up small victories here and there while the water gets ever hotter. Breaking this cycle is key to our future.

Audience

While we’re thrilled to see some interest in this Substack from scholars, our primary audience will be union members, organizers, and other practitioners. We don’t claim to have all the answers, and these posts will partly be an attempt to clarify our own thoughts. However, we hope that our positions – having one foot in the world of academic debates described above and one foot in the labor movement – will allow us to use the former to ground our thinking and generate practical takeaways for the latter.

What’s next?

To start, our next post will be a primer of sorts that lays out the historical development of the asset management industry and dives deeper into some of the debates over the new finance capital. The main point we hope to get across is that the U.S. system of retirement savings has been structurally integrated into a financial system whose operation works counter to the interest of the workers and the planet. In short, the logic of the system by which retirement security is provided in the U.S. actively harms workers. The only real solution to this problem is a fully public system – for instance, a far more robust Social Security system – which treats the economic security of elders as a public good.

From there, we’ll dive into current events – likely using BlackRock’s acquisition spree as the first example.

Thanks for reading,

Jim and Samir

[1] Unless otherwise noted, the currency is USD.

[2] Many alternative asset management strategies involve holding investments for a few years, foreclosing the option of exit in the near-term. Hedge funds, however, usually retain the ability to quickly exit positions.

[3] For example, see Azar, Schmalz, and Tecu. (2018), Anticompetitive Effects of Common Ownership. The Journal of Finance, 73: 1513-1565. https://doi.org/10.1111/jofi.12698 .

[4] Condon, M., Externalities and the Common Owner, 95 Wash. L. Rev. 1 (2020). Available at: https://digitalcommons.law.uw.edu/wlr/vol95/iss1/4 .

[5] Braun, B. (2022). Exit, Control, and Politics: Structural Power and Corporate Governance under Asset Manager Capitalism*. Politics & Society, 50(4), 630-654. https://doi.org/10.1177/00323292221126262 .

[6] For example, see Aquanno and Maher, The Fall and Rise of American Finance: From J.P. Morgan to BlackRock (New York: Verso, 2024).

[7] In an essay published last year, Benjamin Braun and Brett Christophers conceptualized this system-changing power as consisting of three parts: structural, infrastructural, and instrumental. One manifestation of this power, they note, is Daniela Gabor’s notion of “The Wall Street Consensus,” a broad effort to reconceptualize the public sector’s role as one of narrowly ‘‘de-risking’ infrastructure and other assets for private finance. See Braun, B., & Christophers, B. (2024). Asset manager capitalism: An introduction to its political economy and economic geography. Environment and Planning A, 56(2), 546-557. https://doi.org/10.1177/0308518X241227743 .

This post was originally published on March 30, 2025.