GE's Switch

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A Socialist Project e-bulletin .... No. 1459 .... August 1, 2017

GE’s Switch

Stephen Maher

The resignation of General Electric (GE) CEO Jeff Immelt last month is the latest sign of the broad restructuring of political and economic power currently underway in the United States. His departure, and John Flannery’s arrival, reveals a lot about the new phase of financialization that has emerged from the Great Financial Crisis.

As financial markets and institutions became a more important part of the economy in recent decades, so too did they take on a larger role within corporations themselves, even ostensibly nonfinancial enterprises. This fundamental reorganization of corporate power eroded the institutional foundations of the New Deal’s so-called corporate liberalism, contributed to growing state authoritarianism, and allowed for the deepening penetration of financial markets and logics into every... aspect of daily life.

Paradoxically, in the wake of the 2008 financial crisis, the state supported a further push toward consolidated financial control. As a result, a new phase of accumulation has stabilized, and finance has shockingly emerged from the crash even stronger than it was going in.

Observers widely attribute Immelt’s early retirement to pressure from a few activist investors, especially Nelson Peltz, whose Trian Fund Management had been publicly exerting pressure on GE’s management to improve performance. "Looking almost teary-eyed" in a video conference announcing his retirement, Immelt admitted, "I always knew my name wasn’t over the door. You owned the company." Indeed, Wall Street found his performance widely disappointing: shares fell 31 per cent during his tenure, making GE the Dow’s worst performer.

But Peltz’s and Trian’s ability to play such an active role in unseating Immelt resulted from deeper shifts in American capitalism, which not only ended the era of corporate liberalism but also finally demonstrated that we cannot think of industry and finance as opposed.

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