- New Directions in Modern Economics series
Edited by Eckhard Hein, Daniel Detzer and Nina Dodig
Chapter 2: The crisis of finance-led capitalism in the United States
AbstractThis chapter examines the development of the US economy since the prolonged recession in the early 1980s. This period was characterised by a serious weakening in the bargaining position of waged workers and a major expansion of the financial sector. Most of the economic gains accrued to top earners and economic growth became increasingly dependent on the expansion of credit. This precarious constellation led to short recessions in 1990 and again in 2001, but then in 2007 and 2008 the failure of highly complex financial securities led to the most serious financial crisis since 1929. The chapter reviews the development of profitability, income distribution and other key macroeconomic variables in the period leading up to, during, and immediately after the crisis. It then identifies the main channels by which the crisis was transmitted from the US to other advanced capitalist economies and concludes with a brief review of the policy measures introduced by the US government in response to the crisis.
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