Measuring profits rather than employment reveals financialization as the dominant economic trend

Evidence

Profit data are considerably more volatile than employment data.Nevertheless,the picture of structural change in the economy that emerges is nearly the mirror image of the data presented in Figure 1, with the relative position of services and FIRE inverted.Again,the decline of manufacturing is dramatic in this figure.But now FIRE is the dominant sector of the economy, with services accounting for a relatively small share of total profits. … But it does suggest a different emphasis.Rather than the rise of the service sector,post-industrialism,or the information economy, it is financialization that comes sharply into view when profit data rather than employment or GDP are the focus of analysis. — Greta R. Krippner, The Financialization of the American…, 37

Categorization

• XREF: Connects to the empirical-research method of metric choice determining which narrative emerges — relevant to any discussion of how measurement choices frame economic interpretation. — connects to: Finance produced 40 percent of US corporate profits despite being only an information system — Mark Blyth, Austerity: The History of a Dangerous…, 624; Sustainability accounting quantifies some impacts while obscuring hard-to-measure ones — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 88; The US economy became increasingly financialized in the post-1970s period. — Greta R. Krippner, The Financialization of the American…, 5 (+9 more)
• DEFINE: Illustrates that financialization is defined operationally by what metric you examine, not just stated as a term.

Related

• Measuring finance’s rise by profits misleads if grouped under services. (similarity 0.92)
• Financialization must be measured by profit generation, not employment or output (similarity 0.92)
• The US economy became increasingly financialized in the post-1970s period. (similarity 0.87)
• An accumulation-centred view measures economic change by profit location. (similarity 0.87)
• Opposing measurement biases strengthen confidence in the financialization trend (similarity 0.86)
• Financialization marks a decisive shift from production-based to finance-driven accumulation. (similarity 0.82)
• Finance produced 40 percent of US corporate profits despite being only an information system (similarity 0.82)
• Greta R. Krippner — The Financialization of the American Economy (similarity 0.82)
• Financial profits relative to non-financial profits rose three to fivefold by the late 1990s. (similarity 0.81)
• Financialization both derives profits from finance and drains capital from productive investment (similarity 0.81)
• Financialization is measured as the ratio of financial receipts to business receipts. (similarity 0.81)
• Finance has come to dominate American economic life. (similarity 0.81)
• Financialization does not measurably raise firm profits or financial-asset productivity. (similarity 0.81)
• Depreciation allowances bias both profit and cash-flow measures of financialization in opposite directions. (similarity 0.80)
• Counterfactual independence assumptions likely understate financialization’s true inequality impact (similarity 0.80)

Broader Connections

• Opposing measurement biases strengthen confidence in the financialization trend #expands (0.82) — Greta R. Krippner, The Financialization of the American…, 85
• Financialization is a pattern of accumulation dominated by financial channels over trade and production #corroborates (0.80) — Greta R. Krippner, The Financialization of the American…, 42
• Financialization theory links wage-compromise collapse and shareholder value to inequality #expands (0.75) — Natascha van der Zwan, Making Sense of Financialization, 109