At some pivotal point in modern history, the classic struggle between workers and capitalists became a distraction from a deeper and more consequential power battle: that between creditors—the financiers, banks, asset managers—and debtors, meaning producers, workers, and even states.

While managerial orthodoxy and most of political economy still frame agency as a tussle between shareholders and executives, the real locus of control has shifted. Credit creation now rules capitalism. As Yanis Varoufakis and others have shown, it is the logic of credit—its proliferation, allocation, and exploitation—that increasingly determines economic outcomes, social structure, and the very fate of productive enterprise.

Consider this: Today, only about 5% of money is created by central banks; 95% is conjured into existence by private banks through loan issuance. The result is a financial system in which money, formerly a public good, is now wielded as a private weapon. The explosion of “endogenous” credit (generated inside the banking system) has transformed the role of finance from neutral intermediary to unaccountable master. In the US and across the G7, the debt-to-GDP ratio has soared above 250%, while the notional value of derivatives and financial assets exceeds global GDP many times over. For every dollar generated by productive activity, up to $6 is spun in financial transactions, much of it speculative.

This regime of credit has two epochal effects: First, it creates instability. As Varoufakis argues in The Global Minotaur, post-Bretton Woods capitalism is dominated by self-reinforcing cycles of credit expansion and bust—asset bubbles, crisis, and the “socialization of losses” when collapse inevitably comes. Second, it produces a staggering concentration of wealth and power. Asset managers like BlackRock, Vanguard, and State Street control trillions, eclipsing the ownership stakes of any individual capitalist or family. Their interests are often algorithmic, extractive, and radically short-term. Companies and even nations become mere entries in a vast, opaque ledger of debt and derivatives.

What’s more, the logic of credit creation has fundamentally reconfigured the agency problem in management. Shareholders—ostensibly owners—are now often anonymous funds or speculative vehicles with no commitment to the firm as a “going concern.” Voting rights, governance, and strategic direction are dictated not by industrial or entrepreneurial vision, but by the calculus of risk, leverage, and the extraction of maximum short-term returns. The real economy is forced to serve financial imperatives, not vice versa.

Empirically, this system delivers both stagnation and insecurity. Wages have flatlined, while financial profits now account for up to 40% of total corporate profit. Inequality soars: the top 1% holds nearly half of global wealth, while rent extraction, leveraged buyouts, and asset-stripping devastate communities. Even GDP accounting has been distorted: the expansion of financial services, however destabilizing or unproductive, is booked as economic “growth.”

The result is a capitalism where anonymous creditors and asset managers—rather than traditional owners—control both capital flows and the destiny of firms and states. They are largely invisible, unaccountable, and motivated by portfolio optimization, not productive investment or public value. In Varoufakis’ terms, we have entered the era of the “credit lords,” for whom the real economy is simply a field for speculative harvest.

If democracy and stability are to be preserved, reforms must reach far deeper than the traditional nostrums of “prudent risk management.” We must target the structural power of private credit creation itself—limiting leverage, constraining speculative trading, and decisively reversing the abdication of money creation to unaccountable financial actors. Taxation must reclaim public value: excessive capital gains, windfall rents, and speculative profits should be taxed at far higher rates to curb parasitism and fund social investment. Legal accountability cannot be abstract; executives, boards, and fund managers must face real, personal liability for reckless and extractive practices that endanger the fabric of society.

The democratization of finance is no longer optional. Public banks, credit guidance, and stakeholder governance must channel capital toward productive, long-term investment and genuine value creation, rather than short-term extraction. Crucially, the unchecked power of asset managers and portfolio behemoths must be broken: antitrust action, transparency mandates, and strict limits on the concentration of proxy voting power are essential to restoring pluralism and accountability to capital markets. Otherwise, the real economy, and with it society, will remain hostage to the new masters of money.