It happens every few years – not quite with the regularity of the seasons but with the inevitability of a natural disaster. A new company is founded on the basis of a new and seemingly ingenious concept, and then rocket-fuelled by growth-boosting investor capital. It briefly burns bright and then implodes, collapsing under the weight of its own balance sheet.

The latest tech financial calamity is WeWork, an office space and “workplace solutions” operator that is now shrinking rapidly, after a planned initial public offering (IPO) was scrapped when potential investors rejected its absurd $20bn (£15.5bn) valuation. WeWork’s collapse is a business-school study in the excesses of private capital in an unregulated market that fetishises the wealth-creating genius of the lone pioneer.

WeWork’s strategy wasn’t simply to fulfil a practical need: its aim was market domination, to be achieved by undercutting its competitors in a race to the bottom, using investor capital as oxygen to sustain losses while other serviced office-space providers ran out of breath and expired. The idea was then to leverage its reach to name its terms and prices. But despite investors’ indulgence of loss-making ventures that promise enormous future profits, WeWork tested that tolerance with a loss of $219,000 (£171,000) every hour while failing to reach ubiquity fast enough. What WeWork was offering – workspaces and hot desks for the urban freelance – was not, to use the jargon of such companies’ own marketing, sufficiently “game changing”.

Adam Neumann, WeWork’s now ejected founder, is making off with a $1.7bn reward for failing to achieve his vision and appearing to lose investors eye-watering sums of money. As with most tales of financial hubris and reckless over-expansion, the architect absconds with the spoils while the company’s employees pay the price. About 4,000 WeWorkers are expected to be fired. Their new chairman told them they were “taking one for the team” – one of the lesser-known features of the market’s invisible hand.

Neumann was a unicorn founder out of central casting. He is a long-haired messianic hyper-connected bro, whose rather basic business idea was propped up by a talent for raising money and the networks needed to do so. (His wife, Rebekah, is Gwyneth Paltrow’s cousin.) But the crisis at WeWork isn’t just one more bursting-bubble tale fronted by another Steve Jobs wannabe: it exemplifies the increasing volatility of the economic model that inflated the unicorns of the past. And it involves three trends that underpin the growth of enterprises looking to make money by catering to the modern workforce: the expansion of the gig economy, the relatively low cost of commercial real estate, and the increase in financial flows from sovereign investors in search of political capital.

The WeWork debacle should be an indictment of the character of contemporary finance capitalism

What sets WeWork apart is that it is a company built on the rubble of the financial crisis. Its customers are largely drawn from the precariat – workers who no longer expect to find permanent jobs and so instead become full-time gig-economy labourers. The financial crash, combined with the sophistication of remote working solutions, meant that employers were able to create two tiers of labour: full time with full benefits for their most profitable workers; and task-specific gig contracts, without pension or paid leave, for everyone else. Even the cost of the physical space, the ground rent required to house employees, can now be passed on to workers, who pay to rent their own desks in co-working spaces.

This is where WeWork comes into the picture: providing offices to house these satellite employees, and giving them a sense of belonging in their satellite workplace. WeWork buildings have canteens, free coffee stations, an engineered sense of camaraderie and community. Like the Japanese rent-a-family industry, WeWork will sell you the love and warmth of an employer when your real employer is absent, or short of affection.

The aftermath of the financial crisis also made it easy for WeWork to buy and lease cheap commercial property as a result of a real-estate market crash followed by low interest rates – enabling it to become the largest private-sector tenant in New York and London. Its unravelling is already rattling property markets in the US, the UK and Ireland.

Investments that pumped up WeWork embodied another post-crisis trend – financial adventurism as a geopolitical tool. WeWork’s largest backer, Softbank’s Vision Fund, is largely funded by money from Saudi Arabia and Abu Dhabi. This is what analysts call dumb money: huge investments in high-profile tech companies such as Uber, Slack and DoorDash, with the aim of multiplying political clout rather than financial returns, at a time when economic power is shifting from Wall Street to Silicon Valley. Saudi investments buy more than allies in Washington: lavishing money on Silicon Valley helps crown prince Mohammed bin Salman to land soft interviews in the western press and cosy chats with the titans of tech.

The WeWork debacle should be an indictment of the character of contemporary finance capitalism – but it is almost certain to become another unremarkable instalment in the folklore of modern business, another natural disaster that wrecked thousands of lives and careers before the market moved on to its next unicorn. Nothing will change, and there will be no introspection. And it will happen again soon, because late capitalism is sustained by the myth that spectacular implosions like this one are acts of God – when they are entirely man-made.

• Nesrine Malik is a Guardian columnist