Income Dynamics, Economic Rents and the Financialization of the US Economy

The 2008 collapse of the world financial system, while proximately linked to the housing bubble and risk laden mortgage backed securities, was a consequence of the financialization of the U.S. economy since the 1970s. This paper examines the institutional and income dynamics associated with financialization, advancing a sociological explanation of the large shifts of income into the finance sector. Complementary developments included banking deregulation, finance industry concentration, the increased size and scope of institutional investors, the shareholder value movement, and the dominance of the neoliberal policy model. As a result we estimate that since 1980 between 5.8 and 6.6 trillion dollars were transferred to the finance sector. We conclude that understanding inequality dynamics requires attention to market institutions and politics