Financialization and income inequality: bringing class struggle back in

Abstract

Financialization and rising income inequality are two of the most pronounced economic developments of recent decades, and there is increasing evidence that these trends are somehow related. However, explanations of this link are still limited, and pay little attention to workers themselves. As a result, the impact of financialization on income inequality appears at most as an unfortunate side-effect. This article takes a different approach by investigating both financialization and income inequality from within the historical development of the class struggle in the United States economy. It shows that the economic problems of the 1970s that provided the impetus for financialization were closely related to the escalating conflicts between labor and capital, in which the state served as an increasingly important terrain of struggle. Viewed from this perspective, rising income inequality appears less as an unexpected outcome of financialization and more as its very raison d’etre.