Finance produced 40 percent of US corporate profits despite being only an information system

Evidence

At the end of the Bretton Woods era, when the United States finally went off gold in 1971, states around the world had to adjust to what Eric Helleiner has called “the reemergence of global finance.” Floating exchange rates, deregulation, disintermediation, and the rest, which made finance the most profitable sector of the American and British economies by the 2000s, was the new order of things. But what was it all really based upon? After all, finance is most properly thought of as a part of the information system of the economy: linking borrowers and lenders while sitting in the middle collecting a fee. It’s not an industry in the traditional sense, and it certainly should not have been producing 40 percent of corporate profits in the United States on the eve of the crisis—so why was it able to do just that? — Mark Blyth, Austerity, 624

Categorization

• XREF: Connects to the broader austerity literature and Helleiner’s work on the reemergence of global finance, which is foundational context for Mattei’s critique of the fiscal state. — connects to: Finance produced 41 percent of U.S. corporate profits in 2007 — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 748; Nearly 40% of S&P 500 earnings came from financial activities by 2000 — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 49; Financialization both derives profits from finance and drains capital from productive investment — Natascha van der Zwan, Making Sense of Financialization, 29 (+3 more)
• DEFINE: Defines the author’s framing of finance as an information intermediary rather than a traditional industry — a conceptual distinction that grounds the chapter’s argument.

Broader Connections

• Finance produced 41 percent of U.S. corporate profits in 2007 #corroborates (1.00) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 748
• Nearly 40% of S&P 500 earnings came from financial activities by 2000 #corroborates (0.90) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 49
• Measuring finance’s rise by profits misleads if grouped under services. #qualifies (0.80) — Greta R. Krippner, The Financialization of the American…, 21
• Financialization both derives profits from finance and drains capital from productive investment #expands (0.75) — Natascha van der Zwan, Making Sense of Financialization, 29
• Measuring profits rather than employment reveals financialization as the dominant economic trend #qualifies (0.75) — Greta R. Krippner, The Financialization of the American…, 37
• Finance has come to dominate American economic life. #expands (0.75) — Greta R. Krippner, The Financialization of the American…, 7