Electromagnetic grids forced the creation of big banks and big finance

Evidence

The problem was that none of capitalism’s early institutions – specifically, its banks and share markets – were ready for such corporate empires. Simply put, the banks were too small and too fragile and the share markets too thin, too illiquid, to provide the kind of funds Edison needed to build his famous Pearl Street power station, let alone the rest of his electricity grid. … To produce the rivers of credit necessary to fund the Edisons, the Westinghouses and the Fords of early-twentieth-century capitalism, small banks merged to form large ones and lent either to the industrialists directly or to speculators eager to buy shares in the new corporations. That’s how electromagnetism transformed capitalism: while its grids would go on to power mega-firms and its megawatts translated into mega-profits, it also created the first mega-debts in the form of vast overdraft facilities for the Edisons, the Westinghouses and the Fords. And it led to the emergence of Big Finance, which grew up alongside Big Business in order to lend it monies borrowed effectively from the future: from profits not yet realised but which Big Business promised to deliver. — Yanis Varoufakis, Technofeudalism, 135

Categorization

• DEFINE: Establishes the mechanism by which technological infrastructure reshapes financial institutions — a key building block of the technofeudalism thesis where infrastructure again transforms institutions.
• XREF: Relates to Milgrom’s analysis of how institutional change (law merchant) emerged to handle growing trade — here finance institutions emerge to handle electrified industry. — connects to: Financial accumulation depends on resistance rather than pure top-down power — Max Haiven, Cultures of Financialization, 500; Borrowing against unproduced electricity created the 2022 energy crisis doom-loop — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 985; Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis — Albert Bandura, Moral Disengagement: How People Do Harm…, 1492 (+7 more)
• corroborated: 2 independent passages support this claim — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 135

Broader Connections

• Financial accumulation depends on resistance rather than pure top-down power #qualifies (0.95) — Max Haiven, Cultures of Financialization, 500
• Borrowing against unproduced electricity created the 2022 energy crisis doom-loop #expands (0.85) — Yanis Varoufakis, Technofeudalism, 985
• Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis #qualifies (0.80) — Albert Bandura, Moral Disengagement, 1492
• Financialization shifted corporate power from manufacturing and marketing executives toward financial executives. #qualifies (0.80) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 21
• Financial engineering naturalizes crisis to justify yet more markets #qualifies (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 958
• Financialized power conflicts are won by deploying imaginative resources rather than capital #qualifies (0.80)
• Financialization shifts markets from calculation to speculation, destroying predictability #qualifies (0.80) — Wendy Brown, Undoing the Demos, 742
• Modern financial markets are deliberately designed entities #qualifies (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1235
• Finance capitalism’s power struggles are fundamentally contests over speculative imagination #epitomizes (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 148