Financialization must be measured by profit generation, not employment or output

Evidence

A careful examination of the financialization of the American economy requires a different ‘lens’ than that typically used by scholars examining broad shifts in the economy. While most characterizations of long-term shifts in the underlying structure of the economy rely for evidence on changes in employment or in the mix of goods and services produced (e.g. Clark, 1940; Bell, 1973; Castells, 1996), these are not appropriate places to look for the rise of finance. The financial sector is not employment-intensive and its ‘products’ do not show up in transparent ways in national economic statistics (Block, 1987). Thus, in contrast to the dominant perspective on long-term economic change, which is concerned with the tasks performed or with what is produced in an economy, this paper engages another vantage point on economic change by examining where profits are generated in the US economy. — Greta R. Krippner, The Financialization of the American…, 14

Categorization

• XREF: The profit-share-of-GDP method contrasts with the employment/output lens of post-industrial-society scholars (Bell, Castells); this is the methodological turning point that made the field possible. — connects to: Financialization does not measurably raise firm profits or financial-asset productivity. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 179; Measuring profits rather than employment reveals financialization as the dominant economic trend — Greta R. Krippner, The Financialization of the American…, 37; Financialization means accumulation through financial channels rather than production — Greta R. Krippner, The Financialization of the American…, 11 (+2 more)
• DEEPTHINKING: The insight that a sector’s importance can be systematically invisible in standard national-accounting measures is the load-bearing analytic move that redefined how to study economic structure change.

Related

• Measuring profits rather than employment reveals financialization as the dominant economic trend (similarity 0.92)
• Measuring finance’s rise by profits misleads if grouped under services. (similarity 0.89)
• The US economy became increasingly financialized in the post-1970s period. (similarity 0.89)
• An accumulation-centred view measures economic change by profit location. (similarity 0.88)
• Financialization marks a decisive shift from production-based to finance-driven accumulation. (similarity 0.87)
• Financialization can be measured by comparing non-financial firms’ portfolio income to their cash flow. (similarity 0.87)
• Financialization does not measurably raise firm profits or financial-asset productivity. (similarity 0.87)
• Financialization comprises both finance-sector dominance and nonfinance firms’ financial investing. (similarity 0.86)
• Financialization is measured as the ratio of financial receipts to business receipts. (similarity 0.85)
• Financialization is a pattern of accumulation dominated by financial channels over trade and production (similarity 0.85)
• Opposing measurement biases strengthen confidence in the financialization trend (similarity 0.85)
• Financialization both derives profits from finance and drains capital from productive investment (similarity 0.85)
• Scholars asserted financialization’s existence without providing direct evidence (similarity 0.84)
• Greta R. Krippner — The Financialization of the American Economy (similarity 0.84)
• Financialization means accumulation through financial channels rather than production (similarity 0.84)

Broader Connections

• Measuring profits rather than employment reveals financialization as the dominant economic trend #corroborates (0.95) — Greta R. Krippner, The Financialization of the American…, 37
• Financialization can be measured by comparing non-financial firms’ portfolio income to their cash flow. #exemplifies (0.80) — Greta R. Krippner, The Financialization of the American…, 47
• Financialization means accumulation through financial channels rather than production #corroborates (0.75) — Greta R. Krippner, The Financialization of the American…, 11