BlackRock may not be as much of a household name as other mega-corporations, but its influence over global finance is staggering. In this extract from her book, Vulture Capitalism, Grace Blakeley exposes how the world’s largest asset manager controls trillions in investments and shapes markets, corporations and even governments – often with little oversight. She raises critical concerns about this extreme concentration of money and power.

Vulture Capitalism: How to Survive in an Age of Corporate Greed. Grace Blakeley. Bloomsbury. 2025 (paperback); 2024 (hardback).

The hidden world of financial asset management

Most people have heard of Amazon, and of Jeff Bezos with his $150 billion personal fortune. Amazon’s monopoly power, like that of other large consumer-facing corporations, is highly visible and is the subject of ongoing political debate. Most people have not heard of BlackRock, and yet Larry Fink, the CEO of the asset manager whose personal fortune of $1 billion pales in comparison to that of Bezos, is in many ways more powerful than the CEO of Amazon.

Fink has been called the “king of Wall Street” – a man who has built a “vast financial empire, the likes of which has never been seen before”. BlackRock began its life as part of Blackstone Financial Management, before splitting with the firm in the early 1990s.

After the dot-com bubble, BlackRock began to grow very quickly indeed. As well as growing organically, Fink was able to achieve rapid growth through mergers and acquisitions financed by cheap debt. By 2006, after a merger with Merrill Lynch Investment Managers, BlackRock finally reached the threshold of $1 trillion assets under management.

Today, Amazon is the third largest company in the world by market capitalisation, after Apple and Microsoft, with a market capitalisation of $1.7 trillion. But BlackRock, the world’s largest asset manager, controls more than $10 trillion worth of assets. One or another of the Big Three asset managers – BlackRock, Vanguard or State Street – is the largest shareholder in around 88 per cent of S&P500 companies. BlackRock alone is the largest investor in thirty-eight such companies, and has a 3.7 per cent stake in Amazon. Together, the big three oversee $22 trillion worth of assets, and hold about a fifth of all the shares in the S&P500.

BlackRock’s money doesn’t really belong to BlackRock; it belongs to us. Yet that money is being used to augment the power and wealth of those at the top at the expense of everyone else.

Asset managers are financial institutions that manage other people’s money. If you have a pension, you’ll hand your money over to a pension fund, and chances are that pension fund will hand some of your money over to one of the big three, which will decide how that money is invested. In this sense, BlackRock’s money doesn’t really belong to BlackRock; it belongs to us. Yet that money is being used to augment the power and wealth of those at the top at the expense of everyone else.

Most of BlackRock’s clients aren’t looking to beat the market in the short term with clever trading strategies; they’re looking for long-term returns and a safe place to put their cash. Historically, asset management was a relatively small sector, dominated by lots of mid-sized players guarding the savings of the very wealthy. But thanks to an ageing global population, pensions privatisation, the erosion of the welfare state and growing wealth inequality – among other things – the stock of savings has ballooned.

How passive funds undermine the investment market

BlackRock benefited from this trend, and overtook its competitors, by pioneering the use of low-cost passive investment strategies. Rather than providing its clients with specialised advice, many of the products BlackRock offers its clients simply track indices like the S&P500 or the FTSE100. This automated process allows BlackRock to outsource its advisory work to an algorithm, which is far cheaper than employing staff to consult with and invest on behalf of clients directly. While many investors were initially sceptical about the value of passive investment strategies, these algorithms have proven increasingly successful at beating even the most talented fund managers.

But by pushing investment into a pre-selected group of corporations, without much regard for what those firms are doing, passive funds undermine the operation of the “market” for investment.

Investors are supposed to pay attention to decisions being made by senior managers and invest accordingly. Good managers are rewarded, while bad ones are punished. This is the foundation of modern corporate governance. But BlackRock can’t punish managers because it can’t sell its shares. The firm’s stakes in companies like Walmart and Amazon are too large to offload without wrecking the whole market and, in any case, BlackRock’s market-tracking funds are always going to be heavily invested in the largest corporations in those markets. Almost regardless of how these firms perform, they can rely on the fact that BlackRock, Vanguard and State Street aren’t going to sell up.

As The Economist pointed out, one of the main features of healthy financial markets is “a cacophony of diverse actors coming to different conclusions on the price of things, based on their own idiosyncratic analyses.” But financial markets are increasingly starting to resemble a crowded room in which one or two people have a megaphone.

In fact, asset managers like BlackRock may be helping to drive market concentration across the whole economy. Economists have found consistent evidence of anti-competitive effects of common ownership – the ownership of multiple firms within a sector by one shareholder. Where a few powerful asset managers have a stake in most big firms, why would those investors want these firms to compete with each other? It’s better for BlackRock when the corporations they own collude – and perhaps merge – with one another. High levels of common ownership lead to a situation “equivalent to an economywide monopoly”.

Stakeholder capitalism and its “guardians”

But what if this shift is a positive thing? As the “universal owners” of most of the world’s largest companies, the big three should be less interested in “the performance of each individual firm it owns” and more interested in “the performance of the economy as a whole”. The argument that people like Fink could become the guardians of a new, responsible “stakeholder capitalism” is a familiar one, promoted by organisations like the World Economic Forum, hosts of the Davos economic conference. Advocates tacitly acknowledge that corporations and financial institutions have the power to plan our lives, while pleading with them to do so in the general interest.

Stakeholder capitalism is a kind of “autocritique” of capitalism by capitalists themselves. These critiques tend to emerge when capitalism is in crisis without a powerful movement to present an alternative. The “responsible capitalists” of the world believe that if they can demonstrate a record of self-regulation, stakeholder engagement and philanthropy, they can avoid the threats of regulation, redistribution and unionisation.

A few giant, unwieldy organisations act as the ‘new permanent owners’ of the world’s largest corporations and the infrastructure upon which we all depend.

The idea that firms like BlackRock represent the interests of “responsible” capitalists is what has allowed political parties and central banks to build such strong links with the firm. BlackRock has close relationships with governments and central bankers all over the world and has been described as a global “fourth branch of government”. It’s not simply the case that asset managers have extraordinary control over the financial system; massive firms like BlackRock “own, and extract income from, things – schools, bridges, wind farms and homes – that are nothing less than foundational to our daily being”. Their control over these assets is, of course, used to maximise their returns. And this requires them to “relentlessly squeeze” profits out of their holdings – whether that means hiking rents for vulnerable tenants, or charging for the use of common infrastructure.

Rather than efficient financial markets that allocate investment based on the best available information, we have a few giant, unwieldy organisations that act as the “new permanent owners” of the world’s largest corporations and the infrastructure upon which we all depend. In fact, it is possible to observe the centralisation of global capitalism empirically. The authors of one paper show that “three-quarters of the world’s 205 largest firms by sales are linked to a single global company network of concentrated (five percent) ownership ties.”

In a truly free market society, pervasive private power should not exist. All capitalist institutions should be – to a greater or lesser extent – subject to the overwhelming power of the market mechanism. Instead, we find a world in which private institutions are able to dominate and control markets, while also dominating and controlling workers and manipulating entire states. Capitalism means rule by capital – not free markets.

Note: The above article is an abridged version of Chapter Five: Buying Time: How Big Banks Plan from the book, Vulture Capitalism: How to Survive in an Age of Corporate Greed by Grace Blakeley. It is reproduced here with the permission of the author and publisher. Copyright © Grace Blakeley.

This book extract gives the views of the author and not the position of the LSE Review of Books blog, nor of the London School of Economics and Political Science.

Grace Blakeley is speaking in a panel event, Alternatives to Capitalism at 6.30pm on Monday 16 June as part of LSE Festival 2025.

Image: BlackRock CEO Larry Fink by Photo Agency on Shutterstock.

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