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Since the Great Recession of 2007-9 the financialisation of the US economy has reached a watershed characterised by stagnant financial profits, falling mortgage debt and rising public debt. The reliance of households on the formal financial system appears to have weakened for the first time in the post-war period. The financial sector has lacked the dynamism characteristic of the previous three decades and has become more reliant on the state, which has greatly increased its own indebtedness and has driven public interest rates close to zero. At the same time, state intervention has tightened the regulatory framework for big banks. The future path of financialisation in the USA will depend heavily on government policy with regard to state debt and to financial regulation.

The financialization of capitalism has been marked by the sustained rise of financial profits. In the United States, financial profits as a proportion of total profits rose enormously from the early 1980s to the early 2000s, collapsed during 2007–09, and subsequently recovered, but without reaching previous heights. During this period, the trend of the average rate of profit has been largely flat. The relative rise of financial profits in spite of stagnant average profitability represents a theoretical and empirical conundrum. We will argue that the answer should be sought partly in financial expropriation, but also in public interest rates kept at extraordinarily low levels. In this light, the rise of financial profits represents a vast public subsidy to the financial system characteristic of financialization.Click here to purchase a PDF version of this article at the Monthly Review website.

This paper contributes to the literature on secular stagnation by estimating a measure of potential output growth for the post-war US economy derived from a novel model specification that allows for the cyclical interactions between income distribution, represented by the trajectory of the labor share of income, and economic activity, as measured by capacity utilization. The results obtained show that potential output growth exhibits a gradual decline that predates the Great Recession and follows the downward trajectory of the labor share of income, thus suggesting the existence of an important long-run relationship between income distribution and output growth in the United States.

Inequality of income and wealth has skyrocketed since the 1970s. As the super-rich have grasped the vast majority of the gains from economic growth, labor's share of income has declined. The middle class has stagnated, and those at the bottom have become even worse off. Persistent structural discrimination on the basis of race and gender exacerbates these economic disparities.The Great Polarization brings together scholars from disparate fields to examine the causes and consequences of this dramatic rise in inequality. Contributors demonstrate that institutions, norms, policy, and political power—not the "natural" operation of the market—determine the distribution of wealth and income. The book underscores the role of ideas and ideologies, showing how neoclassical economics and related beliefs have functioned in public debates to justify inequality. Together, these essays bear out an inescapable conclusion: inequality is a choice. The rules of the economy have been rewritten to favor those at the top, entrenching the imbalances of power that widen the gap between the very rich and everyone else.Contributors reconsider the data on inequality, examine the policies that have led to this predicament, and outline potential ways forward. Using both theoretical and empirical analysis and drawing on the knowledge of experts in policy, political economy, economics, and other disciplines, The Great Polarization offers a kaleidoscopic view of the processes that have shaped today's stark hierarchies