Suppose Adam Smith, the great Scottish moral philosopher and author of The Wealth of Nations (1776), returned from the dead and was suddenly transported into the world of 2026. He would undoubtedly be astonished by the extraordinary productive achievements of modern capitalism: computers, aircraft, global communications, medical technologies and levels of material prosperity unimaginable in eighteenth-century Scotland. Yet his admiration might rapidly turn to alarm when he examined the structure of contemporary corporate capitalism, particularly the immense concentration of financial influence within institutions such as BlackRock. Smith, so frequently celebrated as the intellectual father of capitalism, was also a penetrating critic of monopolies, corporate privilege and the political influence of powerful commercial interests. The modern financial system might therefore strike him as an extraordinary vindication of some of his darkest warnings.
Consider the latest figures from BlackRock, the American investment management giant headed by Larry Fink. In October 2026, the company announced that its assets under management had reached a record US$15.49 trillion, following net client inflows of approximately US$205 billion during the third quarter. This staggering sum is equivalent to almost half the annual output of the United States economy, although the comparison is between two different measures: assets under management represent a stock of financial assets, while gross domestic product measures the flow of economic production over a year. BlackRock does not own this entire fortune. Much of it belongs to pension funds, institutions and individual investors whose money it manages. Nevertheless, the scale of the organisation illustrates the extraordinary concentration of financial administration in modern capitalism.
Smith would immediately recognise a problem that he identified more than two centuries ago. In The Wealth of Nations, he warned about the directors of joint-stock companies, observing that they were managers of other people's money rather than their own. He believed that the separation between ownership and management could weaken incentives for prudence and create opportunities for waste, negligence and self-interested conduct. His concern was not that every corporate director would necessarily behave dishonestly, but that institutional arrangements could encourage behaviour different from that of individuals risking their own capital. Modern asset management has carried this separation between ownership and control to a scale Smith could scarcely have imagined.
BlackRock is not merely a large corporation producing goods for sale. It is a financial intermediary managing investments across thousands of businesses and markets. Through its funds, it holds shares in numerous major corporations, including businesses that compete against one another. BlackRock also provides investment technology and risk-management services through its Aladdin platform. These activities give it a significant position within the infrastructure of contemporary finance. Yet the interests involved are complex: the ultimate economic owners are frequently ordinary savers, pensioners and institutional clients, while decisions concerning investment administration, stewardship and sometimes shareholder voting are exercised through professional management structures.
It would be inaccurate to suggest that Larry Fink personally owns US$15.49 trillion or possesses unrestricted authority to deploy those assets according to his whims. BlackRock operates under fiduciary duties, contractual obligations, regulatory requirements and client mandates. Nevertheless, the question remains whether the concentration of financial administration within a small number of institutions produces forms of influence that are insufficiently accountable to the people whose wealth is being managed. Smith would surely want to investigate this separation between dispersed economic ownership and concentrated institutional decision-making.
The problem extends beyond BlackRock. Alongside Vanguard and State Street, it forms part of what researchers have described as the Big Three asset managers. Academic research into their holdings has documented the extraordinary prevalence of these institutions among the major shareholders of America's largest publicly traded companies. Much of this concentration reflects the enormous growth of index investing, through which investors obtain diversified exposure to financial markets at relatively low cost. This development has brought substantial benefits to ordinary savers. Yet it also raises questions about corporate governance when a comparatively small group of investment managers administers large shareholdings across competing businesses.
Smith's understanding of competition was fundamentally different from the caricature frequently presented by those who invoke his name. He did not believe that every outcome produced by businessmen pursuing profit was necessarily beneficial to society. His defence of markets depended upon competition, the division of labour and institutional arrangements that limited the ability of powerful interests to exploit consumers. He was acutely aware that merchants and manufacturers might seek privileges from governments to protect themselves against competition. The market was valuable not because businessmen were morally superior, but because competition could discipline their self-interest and direct economic activity towards satisfying the needs of others.
This point is essential to understanding how Smith might judge modern corporate capitalism. He would not automatically condemn BlackRock merely because it had become extraordinarily large. Size alone does not establish monopoly, exploitation or economic inefficiency. A business can expand because it offers superior services at lower prices, and index funds have undeniably reduced investment costs for millions of people. But Smith would ask whether the institutional structure permitted genuine competition, whether financial influence translated into political privilege, and whether the ultimate beneficiaries retained meaningful control over the agents managing their wealth.
One particularly interesting question concerns common ownership. When large investment funds hold shares in numerous competing corporations, the traditional distinction between rival firms becomes more complicated. In ordinary competitive theory, separate owners have incentives to maximise the performance of their individual businesses. But when major institutional investors hold diversified portfolios containing substantial interests in competing firms, questions arise about whether their incentives always correspond to vigorous competition within particular industries. Economists disagree about the practical significance of this problem, and common ownership does not itself establish collusion or anticompetitive conduct. Nevertheless, the possibility would have interested Smith, whose defence of capitalism rested upon competitive rivalry rather than the mere existence of private ownership.
Smith would also be fascinated by the relationship between financial institutions and political authority. He understood that wealthy commercial interests could acquire influence over legislation, trade policy and the privileges granted by government. His writings contain repeated warnings about the danger of allowing particular business interests to shape public policy in their own favour. Modern financial institutions operate within a vastly more complicated political environment, involving central banks, financial regulators, international institutions and governments dependent upon sophisticated capital markets. The potential for close relationships between financial power and public authority is therefore substantial, even where no unlawful conduct occurs.
BlackRock's activities also illustrate the growing importance of financial infrastructure. Investment management today involves more than buying and selling securities. It includes risk modelling, data analysis, technological platforms and the administration of enormous pools of retirement savings. The company's Aladdin platform is one example of how financial technology can become deeply embedded in the operations of investment institutions. Such technology can improve risk management and operational efficiency, but dependence upon common systems also raises questions about operational concentration, systemic vulnerabilities and the consequences of widespread reliance upon a limited number of providers.
Another development that might astonish Smith is the contemporary debate over environmental, social and governance policies, commonly known as ESG. Large investment managers have faced competing pressures from those who want them to encourage corporate action on environmental and social issues and those who argue that such activity can extend financial influence into contested political territory. BlackRock itself has modified aspects of its climate-related commitments amid these controversies. The underlying philosophical issue concerns the proper responsibilities of institutions entrusted with managing other people's investments. Should their role be confined primarily to financial stewardship, or should they exercise broader influence over corporate behaviour in pursuit of social objectives?
Smith's answer cannot simply be assumed. He was, after all, a moral philosopher whose Theory of Moral Sentiments examined sympathy, justice and the ethical foundations of social life. He did not regard economic activity as morally independent of society. Nevertheless, his suspicion of concentrated commercial power suggests that he would have questioned arrangements in which a small number of financial administrators exercised extensive influence over matters extending beyond the immediate economic interests of their clients. The central issue would be accountability: who authorises such decisions, whose interests are represented and what institutional mechanisms prevent the abuse of delegated authority?
The modern enthusiasm for the tokenisation of financial assets would present another intellectual challenge. Larry Fink has argued that blockchain-based systems could transform financial markets by representing assets digitally and making transactions more efficient. Supporters envisage faster settlement, broader market access and new forms of investment participation. Critics raise questions concerning technological dependence, cybersecurity, legal rights and the possibility that financial innovation may introduce risks not fully understood before widespread adoption. Smith would probably have been interested in the potential efficiencies while remaining sceptical of claims that technological novelty automatically guarantees economic improvement.
There is a broader philosophical problem here. Capitalism is frequently defended as a system of decentralised decision-making in which numerous individuals and enterprises respond to market signals. Yet modern capitalism has simultaneously generated immense concentrations of financial and organisational power. The resulting system combines competitive markets with large institutions whose decisions can affect entire industries and national economies. This does not necessarily mean that capitalism has ceased to function competitively, but it does mean that the relationship between private ownership, market competition and institutional authority has become much more complicated than conventional political rhetoric suggests.
Smith's criticism of the East India Company offers a particularly instructive historical comparison. The company was not simply a commercial enterprise. It acquired extraordinary privileges and eventually exercised political and territorial authority, demonstrating the dangers that could arise when concentrated commercial interests became entangled with state power. BlackRock is not the East India Company, possesses no comparable territorial sovereignty and operates under an entirely different legal framework. Nevertheless, the historical example illustrates Smith's awareness that commercial institutions can become politically significant in ways that extend beyond their ordinary economic functions.
It would therefore be a mistake to recruit Smith as an uncomplicated defender of every feature of contemporary corporate capitalism. His support for commercial freedom was accompanied by a deep suspicion of monopoly, privilege and collusion. He understood that the interests of powerful merchants did not always coincide with those of consumers or the wider public. Indeed, one of the recurring themes of The Wealth of Nations is that proposals advanced by concentrated commercial interests should be examined with particular care because those interests may benefit from restricting competition.
At the same time, Smith would probably resist the simplistic conclusion that the solution to concentrated private power is unlimited government control. His political economy recognised that governments themselves could become instruments of privilege, granting protection to favoured interests and restricting the opportunities of others. The danger lies not merely in the existence of powerful corporations or powerful states, but in arrangements through which the two become mutually reinforcing. A system in which economic success increasingly depends upon political access, regulatory advantage or institutional protection departs from the competitive principles Smith sought to defend.
This suggests that the most useful Smithian response to BlackRock would not be an indiscriminate demand to abolish large investment managers. It would involve examining whether financial markets remain genuinely open to competition, whether investors possess meaningful rights, whether corporate governance is sufficiently accountable and whether regulatory structures prevent the concentration of financial power from becoming a source of political privilege. Such an inquiry would distinguish between scale achieved through efficiency and influence sustained through barriers to competition or privileged institutional relationships.
The enormous growth of institutional investment also raises questions about the position of ordinary citizens. Millions of people participate in financial markets indirectly through pension funds, superannuation arrangements and managed investments. In one sense, this represents a democratisation of capital ownership, enabling individuals of modest means to benefit from corporate profits and economic growth. In another sense, it places increasing distance between the ultimate owners of wealth and the institutions exercising practical influence over that wealth. The citizen may own a tiny fraction of hundreds of corporations while possessing little direct knowledge of, or influence over, the decisions made on behalf of that ownership.
Smith would have recognised the moral significance of this separation. His political economy was concerned not merely with the accumulation of wealth but with the institutional conditions under which productive activity served society. An economy could become immensely wealthy while developing structures that undermined competition, encouraged political favouritism or weakened individual independence. Material prosperity, however impressive, would not by itself settle questions about the justice or sustainability of the arrangements producing it.
The spectacle of a single investment management company administering assets equivalent in value to almost half America's annual economic output would undoubtedly have astonished an eighteenth-century economist. But the figure should not distract from the more important questions. BlackRock does not own half the American economy, nor does its asset total establish that it controls every company in which its funds invest. The legitimate concern is subtler: whether the concentration of investment administration, shareholder influence, financial technology and relationships with public institutions has created forms of economic power that traditional ideas of market competition struggle adequately to explain.
Perhaps the greatest irony is that Adam Smith has become a symbolic defender of a corporate order that he might have subjected to relentless criticism. He supported commercial liberty, but not the unrestricted political influence of merchants. He valued competition, but recognised that businessmen frequently sought to escape its discipline. He understood the productive advantages of specialisation and large-scale organisation, while remaining alert to the dangers arising when those entrusted with other people's wealth became insufficiently accountable.
If Smith returned today, he might admire the extraordinary technological achievements and prosperity generated by modern market economies while asking whether the institutional structures governing them had drifted away from the competitive principles that made those achievements possible. His question would not simply be how much wealth BlackRock manages, but whether such concentrations of financial influence remain compatible with genuine economic freedom.
https://www.technocracy.news/blackrocks-record-asset-holdings-are-half-the-size-of-us-economy/