---
name: Financialization
slug: financialization
type: systemic process
status: running
version: 4.2.1
released: "1971-08-15"
maintainer: shareholder primacy doctrine
dependencies:
  - deregulation
  - fiat currency
  - quarterly earnings reports
  - investor sentiment
  - the concept of abstract value
license: Proprietary (terms change retroactively)
tags:
  - economics
  - late capitalism
  - infrastructure
  - everything is a market now
  - rent extraction
---

Financialization

What it actually is

The process by which money stops being a tool for building things and becomes the thing being built.

How it works

Financialization proceeds in predictable stages, which the field calls "innovation" and historians will call something else:

A real thing exists. A factory. A house. A hospital. A song.
Someone notices the thing generates cash flows.
The cash flows are separated from the thing and sold as a product.
The product is bundled with other products and rated by a firm paid by the bundler.
Derivatives of the bundle are sold to parties who do not own, use, or understand the thing.
The thing itself begins to deteriorate. This is considered unrelated.

"We don't make anything anymore. We make the financial instruments that represent the making of things." — attributed to every retired factory worker, never cited

Features

Converts housing from shelter into an asset class
Converts healthcare from a service into a revenue stream
Converts debt from a liability into a product
Converts time into yield
Converts failure into a tax-deductible event
Runs continuously. No scheduled downtime.

Known bugs

Bug	Severity	Status
Wealth concentrates toward existing wealth	Critical	Won't fix
Real wages decouple from productivity	High	By design
Infrastructure deferred in favor of buybacks	High	Disputed
Crises socialize losses, privatize gains	Critical	See: bailout
Metrics replace judgment	Medium	Feature request pending

Configuration

discount_rate: maximize
time_horizon: next_quarter
labor_treatment: variable_cost
community_impact: externality
long_term_investment: see "other departments"
success_metric: shareholder_returns

Edge cases

When everything is financialized, the financial sector has nothing left to extract from and briefly panics. This is called a recession.
Financializing a thing does not require understanding the thing. This is considered a feature of liquidity.
Occasionally a pension fund owns a controlling stake in the company employing the pensioners. The system does not consider this ironic.

Changelog

v1.0 (1600s): joint-stock companies allow risk distribution across strangers
v2.0 (1900s): consumer credit expands the extractable surface area to individuals
v3.0 (1970s): Bretton Woods collapse, shareholder value doctrine, options compensation
v4.0 (2000s): mortgage-backed securities discover that packaging bad bets in layers makes them temporarily invisible
v4.2.1 (present): algorithmic trading, private equity in everything, your dentist is owned by a fund

FAQ

Does it produce value? It produces returns. These are not the same thing.

Can it be reversed? Technically yes. Politically, ask again later.

Who benefits? Anyone who owned assets before the process accelerated. Mostly a timing issue. Mostly.

Is it evil? It is a process. Processes do not have intentions. This distinction carries significant legal weight.

drafting spec…