Industrial corporations transformed into financial hedge funds before their collapse

Evidence

In this new Gilded Age that Nixon’s Shock occasioned, the technostructure faced stiff competition for the best and brightest minds. Physics PhDs from the best schools, dazzling mathematicians, even artists and historians were flocking to Wall Street. Power was shifting fast from the Fords, the Hiltons and the Drapers to Goldman Sachs, Bear Stearns and Lehman’s. To catch up, large parts of the technostructure adapted by joining in. When auditors entered the bankrupted General Motors in 2009, after this financialisation bubble had burst, they discovered that a company famed for producing cars and trucks had been transformed into a hedge fund buying and selling options – with some car production on the side to keep up appearances. — Yanis Varoufakis, Technofeudalism, 901

Categorization

• XREF: Connects to the reader’s platform-capitalism working thesis — the financialization of real-economy firms is a precursor to platform feudalism’s extraction model. — connects to: GE’s finance arm outgrew its industrial parent and dominates its profits — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 44; Major nonfinancial corporations shifted their earnings toward financial operations — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 45; Financial derivatives now substitute for physical and organizational means of managing corporate risk — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1178 (+6 more)
• CANDY: GM-as-hedge-fund with car production as a side hustle is a striking, tweetable image of financialized capitalism.
• corroborated: 2 independent passages support this claim — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 901

Broader Connections

• Derivatives evolved from risk-hedging tools into a dominant speculative asset class #expands (1.00) — Max Haiven, Cultures of Financialization, 135
• Takeover markets and institutional investors drove shareholder-value restructuring of corporations. #expands (1.00) — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 31
• Non-financial firms increasingly resemble financial corporations through revenue reliance #expands (1.00) — Greta R. Krippner, The Financialization of the American…, 136
• Financialization fragments corporate, state, and individual horizons into short-termism #expands (1.00) — Max Haiven, Cultures of Financialization, 138
• Stagnating growth plus deregulation pushed firms from production into financial investment #expands (1.00) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 41
• Financial leverage amplifies both gains and losses and underpins private equity and hedge funds #expands (1.00)