The Death of Big Bank Power and the Rise of Tech Hegemony

By Conor Sen

NEW YORK (Minyanville) -- The biggest change that occurred during the tremors of 2008 that nobody caught was the power hand-off from banks to tech companies.

One of the most fascinating economic history books I've read is The Pursuit of Power a look at 1,000 years of world history and how changes in technology, military technology in particular, altered the dynamics of power relationships throughout the world. Developments as wide-ranging as the discovery of gunpowder, the introduction of military drilling, and the invention of the internal combustion engine have had profound impacts on society that are often visible only with the benefit of decades or hundreds of years of hindsight.

Similarly, we see that as society changes, the institutions that dominate the organization of production and human interaction have tended to wield unchecked power and collect monopolistic profits. Think of the pharaohs, emperors, and kings of the ancient world, or the church in the Middle Ages.

Since the dawn of the Industrial Revolution, this power transfer has led to the rise of a new set of institutions. At first we saw governments and factories play this role. As capital accrued to factory owners, advancements in energy and technology occurred, and large-scale consumption came of age, factories morphed into corporations and banks, which gradually co-opted governments thanks to political donations and their economic interests. The peak of this era was in the early 1990s, after the fall of the Soviet Union reduced the influence of military interests and before the development of the commercial internet began empowering individuals.

This era ended on September 15, 2008, the day Lehman Brothers filed for bankruptcy. Some banks failed, others needed government bailouts, and public blame for the crisis landed on the largest firms in the industry and their enablers in Washington. Many bears have continued to focus on the aftermath of this crisis and have underestimated the rising institutions that promise to dominate the economy and will see their influence in government soar over the next 50 years.

In short, we've traded Lloyd Blankfein and Jamie Dimon for Larry Page and Mark Zuckerberg.