Skip to main content
×
Home
    • Aa
    • Aa

The Politics of Financialization in the United States, 1949–2005

Abstract

Financial activity has become increasingly important in affluent economies in recent decades. Because this ‘financialization’ distributes costs and benefits unevenly across groups, politics and policy likely affect the process. Therefore, this article discusses how changes in the power of organizations representing the ‘winners’ and ‘losers’ of financialization affect its pace. An analysis of the United States from 1949–2005, shows that when unions are stronger, and when the Democratic Party is in power and is more reliant on the support of working-class voters, financialization is slower. In contrast, when the financial industry is more highly mobilized into politics, financialization is faster. The study also finds that financial deregulation was one policy translating the political power of these actors into economic outcomes.

Copyright
Footnotes
Hide All

Department of Political Science, University of South Carolina (email: witkoc@mailbox.sc.edu). The author would like to thank Lee Drutman, Nate Kelly, Chloe Thurston and the anonymous reviewers for helpful suggestions. Online appendices and data replication sets are available at https://thedata.harvard.edu/dvn/dv/cwitko.

Footnotes
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Alberto Alesina , Daniel D. Cohen , and Nouriel Roubini . 1993. Electoral Business Cycle in Industrial Democracies. European Journal of Political Economy 9:123.

Maryann Barakso , Jessica C. Gerrity , and Brian F. Schaffner . 2011. Assessing the Importance of Financial and Human Capital for Interest Group Sector Strength across American Communities. British Journal of Political Science 41 (3):557580.

Michael M. Bechtel , and Roland Fuss . 2010. Capitalizing on Partisan Politics? The Political Economy of Sector-Specific Redistribution in Germany. The Journal of Money, Credit and Banking 42:203235.

Suzanna De Boef , and Luke Keele . 2008. Taking Time Seriously. American Journal of Political Science 52 (1):184200.

Chris Den Hartog , and Nathan W. Monroe . 2008. The Value of Majority Status: The Effect of Jeffords’ Switch on Asset Prices of Republican and Democratic Firms. Legislative Studies Quarterly 33:6384.

Quy Toan Do , and Andrei A. Levchenko . 2007. Comparative Advantage, Demand for External Finance, and Financial Development. Journal of Financial Economics 86 (3):796834.

Robert F. Engle , and Clive W. J. Granger . 1987. Co-Integration and Error Correction: Representation, Estimation, and Testing. Econometrica 55 (2):251276.

Peter K. Enns , Nathan J. Kelly , Jana Morgan Thomas Volscho , and Christopher Witko . 2014. Conditional Status Quo Bias and Top Income Shares: How U.S. Political Institutions Have Benefited the Rich. The Journal of Politics 76 (2):289303.

Ismail Erturk , Julie Froud , Sukhdev Johal , Adam Leaver , and Karel Williams . 2007. The Democratization of Finance? Promises, Outcomes and Conditions. Review of International Political Economy 14 (4):553575.

Geoffrey Evans , and James Tilly . 2012. How Parties Shape Class Politics: Explaining the Decline of the Class Basis of Party Support. British Journal of Political Science 42:137161.

Neil Fligstein , and Adam Goldstein . 2010. The Anatomy of the Mortgage Securitization Crisis. In Markets on Trial: The Economic Sociology of the U.S. Financial Crisis: Part A (Research in the Sociology of Organizations, Volume 30), edited by Michael Lounsbury and Paul M. Hirsch, 2970. London: Emerald Group Publishing Limited.

Neil Fligstein , and Taekjin Shin . 2007. Shareholder Value and the Transformation of the US Economy, 1984–2000. Sociological Forum 22:399424.

Richard B. Freeman 2010. It’s Financialization! International Labour Review 149 (2):163183.

James H. Fowler 2006. Elections and Markets: The Effect of Partisanship, Policy Risk, and Electoral Margins on the Economy. Journal of Politics 68 (1):89103.

Carola Frydman , and Raven S. Molloy . 2011. Does Tax Policy Affect Executive Compensation? Evidence From Post-War Tax Reforms. Journal of Public Economics 95:14251437.

Don Sherman Grant , and Michael Wallace . 1994. The Political Economy of Manufacturing Growth and Decline Across the American States, 1970–1985. Social Forces 73 (1):3363.

Peter A. Hall 1993. Policy Paradigms, Social Learning and the State: The Case of Economic Policy-Making in Britain. Comparative Politics 25 (3):275296.

Thomas H. Hammond , and Jack H. Knott . 1988. The Regulatory Snowball: Explaining Deregulation in the Financial Industry. Journal of Politics 50 (1):330.

Timothy Hellwig . 2008. Explaining the Salience of Left-Right Ideology in Postindustrial Democracies: The Role of Structural Economic Change. European Journal of Political Research 47:687709.

Timoty T. Hellwig , Eve M. Ringsmuth , and John R. Freeman . 2011. The American Public and the Room to Maneuver: Responsibility Attributions and Policy Efficacy in an Era of Globalization. International Studies Quarterly 52 (4):855880.

Douglas A. Hibbs 1977. Political Parties and Macroeconomic Policy. American Political Science Review 71 (4):14671487.

Shigeo Hirano , and James M. Snyder . 2007. The Decline of Third Party Voting in America. Journal of Politics 69 (1):116.

Evelyne Huber , and John D. Stephens . 2001. Development and Crisis of the Welfare State: Parties and Policies in Global Markets. Chicago, IL: The University of Chicago Press.

Alan M. Jacobs 2008. The Politics of When: Redistribution, Investment and Policy Making for the Long Term. British Journal of Political Science 38 (2):193220.

Seema Jayachandran . 2006. The Jeffords Effect. Journal of Law and Economics 49 (2):397425.

Steven N. Kaplan , and Joshua Rauh . 2010. Wall Street and Main Street: What Contributes to the Rise in Highest Incomes? Review of Financial Studies 23 (3):10041050.

Nathan J. Kelly 2009. The Politics of Income Inequality in the United States. New York: Cambridge University Press.

Nathan J. Kelly , and Christopher Witko . 2012. Federalism and American Inequality. Journal of Politics 74 (2):414426.

Lane Kenworthy . 2010. How Much Do Presidents Influence Income Inequality? Challenge 53 (2):90112.

Greta R. Krippner 2005. The Financialization of the American Economy. Socio Economic Review 3 (2):173208.

Paul J. Quirk 1988. In Defense of the Politics of Ideas. The Journal of Politics 50 (1):3141.

Phillip Rehm , Jacob S. Hacker , and Mark Schlesinger . 2012. Insecure Alliances: Risk, Inequality and Support for the Welfare State. American Political Science Review 106 (2):386406.

Daniel J. Tichenor , and Richard A. Harris . 2002. Organized Interests and American Political Development. Political Science Quarterly 117:587612.

Donald Tomaskovic-Devey , and Ken-Hou Lin . 2011. Income Dynamics, Economic Rents, and the Financialization of the U.S. Economy. American Sociological Review 76 (4):538559.

Jean Pierre Urbain . 1992. On Weak Exogeneity in Error Correction Models. Oxford Bulletin of Economics and Statistics 54 (2):187207.

Thomas W. Volscho , and Nathan J. Kelly . 2012. The Rise of the Super-Rich: Power Resources, Taxes, Financial Markets and the Dynamics of the Top 1 Percent, 1948–2008. American Sociological Review 77 (5):679699.

Bruce Western . 1995. A Comparative Study of Working Class Disorganization: Union Decline in Eighteen Advanced Capitalist Countries. American Sociological Review 60 (2):179201.

Christopher Witko . 2011. Campaign Contributions, Access and Government Contracting. Journal of Public Administration Research and Theory 21 (4):761778.

Christopher Witko . 2013. Party Government and Variation in Corporate Influence on Agency Decisionmaking: OSHA Regulation, 1981–2006. Social Science Quarterly 94 (4):894911.

Christopher Witko , and Adam J. Newmark . 2005. Business Mobilization and Public Policy in the U.S. States. Social Science Quarterly 86:356367.

John R. Wright 2000. Interest Groups, Congressional Reform, and Party Government in the United States. Legislative Studies Quarterly 25 (2):217235.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

British Journal of Political Science
  • ISSN: 0007-1234
  • EISSN: 1469-2112
  • URL: /core/journals/british-journal-of-political-science
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×
Type Description Title
PDF
Supplementary Materials

Witko Supplementary Material
Supplementary Material

 PDF (436 KB)
436 KB

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 13
Total number of PDF views: 148 *
Loading metrics...

Abstract views

Total abstract views: 643 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 29th June 2017. This data will be updated every 24 hours.