The United States dominated by finance: worse times will come

Abstract

This article analyzes the origin and development of the dominance of finances over the economy of the United States. The first subject broached is how three great social and economic forces tied to the financial expansion became consolidated. The meaning of financialization is later examined as it relates to the size and the characteristics of the financial sector and financial markets, to the conditions that they exert on non financial agents (households, businesses and government) and the structural instability that determines the cyclical dynamic of the economy. In third place, the article examines how historical facts debunk ideological hypothesis that defend the advantages of deregulated finances. In fourth place, the article explains why the financial reform approved in 2010 does not guarantee the creation of a preventative and supervisory structure capable of preventing a repeat of the successive crises seen since 1981, particularly in the absence of regulatory structures that guarantee the profound transformation of agents, markets, instruments and financial criteria under which they operate. The article concludes that finances will continue to dominate the economy and financialization will provoke new crises.