Income Dynamics, Economic Rents and the Financialization of the ...

Income Dynamics, Economic Rents and the Financialization of the US Economy
Donald Tomaskovic-Devey, University of Massachusetts, Amherst 1
Ken-Hou Lin, University of Massachusetts, Amherst
1 Draft 8-23-2010. We thank Dustin Avent-Holt, Alan Dorsey, Larry Devey, Emily Erikson, Gre-
ta Krippner, James Crotty, and Art Sakamoto for generous comments on the paper and to How-
ard Krakower of the Bureau of Economic Analysis for help with the National Income and Prod-
uct Accounts. This research is being supported by the National Science Foundation under grant
SES- 0956273. Please send correspondence to tomaskovic-devey@soc.umass.edu.
Electronic copy available at: http://ssrn.com/abstract=1539162
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ABSTRACT
Income Dynamics, Economic Rents and the Financialization of the US Economy
This paper examines the income dynamics associated with the financialization of the US econo-
my. We advance a rent based explanation of the shift in US incomes into the finance sector. We
document both changes in income distributions and the institutional transformations that facili-
tated this process. Our analyses shows that long term shifts in institutional practices favor the
accumulation of income rents in the finance sector. Most of the increased banking industry in-
come went to profits rather than employee earnings. In contrast, the securities industry showed
increasing profit accumulation only after 2000, while employees in this industry made extraordi-
narily strong income gains beginning in 1980 and continuing through 2008. Where they occurred,
employee income gains were largely limited to managerial, professional and sales occupations.
White men benefited as well. Across the whole finance sector excess income rents since 1980
totals between 4.5 and 5.1 trillion dollars, half of which were realized since the year 2000. Be-
tween 60 and 70 percent of these rents were realized as excess profits, while the remainder as
increased employment and compensation for employees in this sector.
Electronic copy available at: http://ssrn.com/abstract=1539162
2

“I think everybody a few years ago got caught up in the idea that the markets are self-correcting
and self-disciplined, and that the people in Wall Street will do a better job protecting the financial
system than the regulators would? I do think the S.E.C. got diverted by that philosophy.”
(Mary Shapiro, Chair U.S. Securities and Exchange Commission 2010).
Introduction
This paper explores the income dynamics associated with the financialization of the US economy
between 1980 and the 2008 collapse of the US financial system. Financialization refers to two
interlocked processes. The first is the increasing centrality of firms in the finance sector to the
whole economy. Second is the increased investment in financial activity by all actors in the
economy, including non-financial firms. Financialization of the US economy accelerated after
the deregulation of the banking industry in the 1980s and the adoption by the Federal Reserve
and Securities and Exchange Commission of a passive approach to banking and investment regu-
lation (Kripner fc). Financialization is now recognized as central to the larger pattern of neoli-
beral reform in the post 1980 period (Prasad 2006; Fourcade-Gourinchas and Babb 2002). It is
also now widely recognized that the current financial crisis and the investment bubbles that pre-
ceded it were facilitated, if not initiated, by the lack of government regulation of new financial
instruments and practices invented during this period of financialization (Davis 2009).
The 2008 collapse of the finance sector has been properly blamed on the rise in real estate
prices, the issuing of mortgages to high risk applicants, the linked speculation in mortgage
backed derivatives and the speculative real estate investment bubble they jointly produced (Fligs-
tein and Goldstein 2010). This account, however, misses the historical and institutional devel-
opments that facilitated financialization. It is these longer term institutional transformations
which provided the yeast for this particular investment bubble. The historical antecedents of the
contemporary crisis and its implications for income distributions more broadly are also easily
3

overlooked in the search for proximate causes of financial collapse. Building on recent research
on the financialization of the US economy, this paper outlines the institutional shifts that pro-
duced substantial economic rents in the finance sector, documents the income distribution conse-
quences of post-1980 financialization, and the further influx of income into this sector after 2000.
In the conclusion we speculate on the redistribution potential of the 2008-2009 financial collapse.
This paper proceeds in five section. First, we extend prior time series that demonstrate the
shift in national income into the finance sector since 1980. Not surprisingly, we show that the
growing dominance of financial activity post-1980 continued its rapid growth from 2000 to 2008.
Second, we review and extend sociological rent theory as a possible explanation as to why in-
come accumulated in the finance sector. We argue that financialization of the US economy
created a rent structure which since early 1980s increasingly channeled national resource into the
financial sector. Third, we recount an institutional explanation of financialization, including po-
litical and economic processes which favored the finance sector and short term financial specula-
tion over physical capital and long term investment horizons. Our analysis shows that the finan-
cialization of the US economy was a result of alliance formation among multiple actors, and that
these alliances took both regulatory and organizational forms. We also discuss how neoliberal
ideology contributed to this process and, later, justified the hidden rent structure. Fourth, we ex-
amine the distributional consequences of finance sector rents, documenting which actors – own-
ers and classes of employees benefited. Finally, we conclude with a discussion of the potential
rent destruction and preservation politics of 2008-2010.
We intend to make contributions to three literatures. For the literature on the financializa-
tion of the US economy we extend existing time series through 2008 and add industry specific
details on both profit and employee earnings dynamics. The latter is also a contribution to the
4

economic sociology and political economy of financialization because we demonstrate the in-
come distribution consequences of financialization, a dimension of financialization that has been
implied but not examined in the past. Finally, we deepen the sociological application of rent
theory by stressing the importance of observing (rather than conjecturing) the political, market
and institutional processes that generate market power and so income rents, develop our institu-
tional analyses with an eye to multiple actors, including consumers, the finance sector, the busi-
ness community more generally, and the state, and point out the potential role of politically me-
diated problem solving producing unintended consequences for rent creation and destruction.
1. Evidence of Financialization.
There is a small but convincing literature analyzing the shift of economic activity in the United
States from manufacturing and service activity to financially oriented investment and managerial
strategies. Epstein and Jayadev (2005) show that the finance share (which they define as finance
sector income plus interest income in non-finance sectors) of national income rose 18% (abso-
lutely, not relatively) in the US after 1980. 2 Similarly, Krippner (2005) shows that after a long
period of post-depression stability, the ratio of finance income to corporate profit began to grow
slowly in the 1970s, rose dramatically after the deregulation of banking in the early 1980s and
grew to approximately 40% of non-financial sector profits at the beginning and again at the end
of the 1990s. This shift in the source of non-financial firm revenue was heavily concentrated in
the manufacturing sector and substantially produced by increased investments in credit, futures
and stock market activity. The rise of General Motors (through GMAC) and GE (through GE
Capital) as major financial actors are probably the most familiar examples, although the shift of
2 This much is larger than in any of the other OECD countries. At 10% Australia is the next larg-
est.
5

non-financial firms into financial activity was widespread. Not surprisingly, finance sector prof-
its surged during this same period, with the finance sector (banks, insurance, securities, real es-
tate) share of total profits shooting up by a factor of three to five times (depending on Krippner’s
measure of profits) across the period. 3 Philippon and Reshef (2007, 2009) document that there
has also been a rise in employee earnings in the finance sector since 1980, suggesting that at least
some employees within this sector benefited from financialization. 4 Rauh and Kaplan (2007)
show that employees on Wall Street, including CEOs and investment managers in commercial
and investment banks, banks holding companies, and hedge funds made up an increasing share
of the very highest earners in the economy.
Other studies find that the financialization of the US economy also had a profound impact
on non-financial sector investment in real capital. Stockhammer (2004) estimates a macro-
economic model of country level capital investment as a function of the financialization of non-
finance sector profits, finding that financialization depresses US non-financial capital invest-
ment. 5 The model does not explore the influence of finance sector growth on capital accumula-
3 In a careful analysis of alternative explanations Krippner (fc) demonstrates that financialization
is not a function of the rise of financial subsidiaries, outsourcing of financial functions or the
globalization of trade. In fact, global income flows by US firms show even steeper moves toward
financialization than do domestic production.
4 Although we know of no studies, we suspect that the financialization of the non-finance sector,
particularly in manufacturing, may have contributed to the trend toward growing income inequa-
lity during the same period.
5 Stockhammer (2004) explores similar models for the UK, France, and Germany. In Germany
where financialization is most recent and least developed there is no influence on capital invest-
6

tion but since the two trends are linked it suggests that, as non-financial firms increased their
investment in financial instruments, they inflated the profits of the finance sector even as they
reduced capital investment in production oriented activity. Orhangazi (2008) using firm level
panel data shows that financial payments to finance sector activity (interest, dividends, stock
buy-backs) has had a significantly negative effect on new capital investment by most firms,
while profit on non-financial firm’s investment in finance instruments has had an additional neg-
ative effect on capital investment among the sub-set of larger firms. Financialization appears to
crowd out capital investment in real productive assets even as it enriches the finance sector.
The literature on financialization suggests four provisional conclusions. First, from 1980
to 2000, the share of national income captured by the finance sector rose rapidly. Second, at
least some of this income was distributed to employees which led to rapid increase in wage and
salary for some workers. Third, an increasing proportion of total profits in the US economy were
realized in the finance sector. And finally, and linked to this rise in finance sector income, non-
financial firms increasingly made and realized financial investments. All of these conclusions
were reached on data prior to 2001. Taking more recent, pre-crisis, run-up in stock market and
real estate value, and the final elimination of the few remaining market restraints on banking
behavior by the US Congress in 1999 in to consideration, we expect these trends to have contin-
ued, if not accelerate, after 2000.
ment. France where financialization was almost as extreme as in the US showed the same pattern
of depressed non-financial capital investment. In the UK which has also seen strong financiali-
zation there is no influence of financialization on capital investment, but non-financial capital
investment was already at a very low level.
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Using National Income and Product Account data, Figures 1-2 extend these time series to
the present. 6 Figure 1 shows that the rise of the Finance Sector as a proportion of GDP reported
by Krippner (2005) continued after 2001. 7 By 2007 this sector accounted for almost a quarter of
all income in the US economy. The relative decline of manufacturing continued as well.
--Figure 1 about here--
Following Krippner (fc) we report two measures of profits. The first we label pre-tax
profits, this subtracts depreciation allowances from real net income. This exclusion is an ac-
counting practice that recognizes that productive assets wear out. But it is also a policy lever that
exempts some corporate profit from taxation, presumably in order to encourage capital invest-
ment. Depreciation allowances change over time and, to some extent, vary by industry as Con-
gress has attempted to encourage capital investment in specific industries (e.g. oil and gas explo-
ration). Thus depreciation is an accounting practice that allows corporations to not count some of
6 The National Income and Product Accounts are produced by the US Bureau of Economic
Analysis and are the primary source of data used to estimate the Gross National Product of the
United States. These data are primarily derived from income tax returns aggregated to the indus-
try level and so are more accurate than conventional survey data. See Appendix A for concor-
dance we use to harmonize Standard, North American, and Census Bureau Industrial Classifica-
tions across time.
7 Throughout this paper we display time series as ratios of national income. This mirrors our
theoretical account of income rents developed in the next section, which treats income dynamics
from a relational rather than absolute perspective. In addition, focusing on ratios simplifies com-
parisons across time because they control for dynamics associated with inflation, growth and to
some extent the business cycle.
8

their profits as taxable income. Thus, in our second measure we count all corporate profit (i.e. we
add back depreciation allowances). Krippner (fc) labels this measure corporate cash flow, we
refer to it as realized profit. This is the more accurate measure of where in the economy profits
are accumulating. While depreciation allowances may be reinvested into new physical capital, in
practice this income can also be distributed to owners, top managers, employees, or as the pattern
of financialization demonstrates invested in financial assets. Figure 2 displays the trends in
finance sector profit as a percent of all private sector profit since 1948. We report parallel time
series for both measures between 1997 and 2000, during this period the National Income and
Product Accounts shifted from the Standard Industrial Classification (SIC) to the North America
Industry Classification System (NAICS). The key change for the Finance Sector associated with
this shift was the creation of a new category of Holding Companies that managed financial assets.
This re-categorization shifted a significant proportion of profits from the original banking indus-
try to this new category
--Figure 2 about here--
Profits in the financial sector as a proportion of all profits in the economy grew slowly
between 1948 and 1970, dropped across the 1970s, and increased dramatically after1980. Figure
2 also shows that the post-1980 pooling of corporate profits in the finance sector accelerated af-
ter 2000. Using the conventional accounting measure this trend peaked in 2002 when fully 45%
of all taxable profits in the private sector were absorbed by finance sector firms. By comparison
finance sector employment grew less dramatically, moving from 3.9% to 7.2% of employment
during the same period.
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The realized profit time series (which excludes depreciation) shows that the finance sec-
tor consistently receives a smaller share of total than pre-tax profits in the economy, because
capital depreciation is typically larger in other (particularly mining, manufacturing and transpor-
tation) sectors. The same basic pattern, however, of increased profits in the financial sector is
still evident, with the finance sector retaining 30% of all profits in the US economy by 2002.
Across the time series it is clear that the finance sector has become not simply a larger part of the
economy but has become more powerful in terms of its ability to realize as profits a growing
share of national income.
--Figure 3 about here--
We are also interested in whether the increased income into the finance sector led to
higher incomes for employees in the sector. The 2009-2010 political outrage over the very high
bonuses of bank executives and Wall Street traders suggest that this may have been the case.
Figure 3 displays the ratio total employee compensation (including salary, bonuses, and benefits)
as a proportion of total national compensation over sector employment as a proportion of total
national employment. Prior to 1980, employees in this sector on average earned about their per
capita share of employee income. Following three decades of stability, subsequent to 1980 em-
ployee compensation in this sector soared, although less steeply after 2000. By 2000 the average
compensation in this sector was 60% higher than the national average. Because the estimates are
at the industry-level, these data do not tell us which employees benefited, a question we return to
later in the paper.
2. Theoretical Explanation of Economic Rents
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While we have established that the finance sector accumulated an increased share of national
production after 1980 we have not established why this happened. A simple account might be
that finance sector productivity soared after 1980. Since productivity is typically defined circu-
larly in terms of value realized in markets, this is true by definition. The more interesting ques-
tion is what set of changes in the rules of the game allowed this realization of income. We look
to rent theory to provide such an explanation.
Sorensen’s (2000; 1996) rent-based model of income inequality stresses the political me-
chanisms through which actors in markets manipulate supply and demand to create and maintain
monopoly rents (or to destroy other actors’ monopoly rents). Actors work to create and sustain
monopolies of one sort or another and so evade the discipline of competitive markets. 8 Some-
times these monopolies are short-lived as when a firm produces a new product before competi-
tors enter the market. When firms can secure relatively permanent advantage through state sanc-
tioned monopolies or through scale based barriers to entry that allow them to monopolize mar-
kets they can capture rents for long periods. 9 The main contrast between rent theory and conven-
8 While we think it is typically true that actors attempt to sustain rents, as demonstrated in our
later analysis, it can also be the case that initial rents occur for reasons of chance and as unin-
tended consequences of other actions. There are methodological implications of this insight, that
the beneficiaries of economic rents may not have been the actors that put them in place, suggest-
ing that historical analyses of institutional creation are needed to identify actors and motives.
Post-hoc interpretations of actor power based on who benefited we see as a backwards reading of
history and analytically unsatisfying.
9 Although Sorensen takes a perfectly competitive market as a reference, this is primarily a heu-
ristic device. As far as we can tell such markets rarely exist.
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tional market accounts is that rent theory questions the free market assumption that actors are
fairly rewarded according to their productivity under the assumption of competitive markets. It
argues that markets are not neutral but subject to political, institutional, and ideological competi-
tion and dominance.
Sociologists increasingly use some variant of rent theory to explain income inequality
dynamics. For example, Weeden (2002) demonstrates that actors organized into occupations that
through state licensing successfully close off access to those occupations (i.e. control labor
supply) receive higher wages. Focusing on change since 1980 in US income inequality Morgan
and colleagues document industry linked selective rent destruction to the declining fortunes of
blue collar workers in general and the white working class in particular (Morgan and Tang 2007;
Morgan and McKerrow 2004).
We see the accumulation of both profits and higher earnings in the finance sector post-
deregulation as reflecting the new institutional autonomy granted an increasingly concentrated
industry by the neoliberal state. These institutional transformations in the field of market regula-
tions and expectations have increased the ability of actors in the finance sector to secure econom-
ic rents (Fligstein and Goldstein 2010). In addition, the deregulation of the finance industry al-
lowed the industry to both create new financial instruments and redefine market behavior
(MacKenzie and Millo 2003) in an environment in which government regulation of new instru-
ments did not occur. In the next section we outline these institutional shifts.
Rent theory is explicit in stating where money rents come from. When economic rents are
associated with the power of firms (or industries) to reduce competition, above market profits
come from the consumers who pay higher prices than they otherwise would. Similarly, employ-
ment rents (above market wages to employees) are derived from some combination of other em-
12

ployees, a lower capital share of income, or passing high labor costs on to customers. Such mar-
ket power has been linked to relative power in supplier as well as consumer exchange networks
(Burt 1983), in production (Tomaskovic-Devey et al 2009) or in both (Tomaskovic-Devey and
Skaggs 1999). Others have referred to this income distribution process as one of exploitation in
which the material conditions on one actor are dependent on the contributions of exchange part-
ners (Roemer 1982; Tilly 1998; Sakamoto and Liu 2006).
Rent, market power and exploitation approaches all agree that relatively powerful actors
are more likely to receive and be able to defend a greater share of available income. Convention-
al rent theory takes as a moral baseline that income distributions should reflect the value of ac-
tors in a perfectly competitive market (Sorenson 2000). Others are more likely to evaluate the
distribution of income as just when actors’ share of contribution to production is realized in their
earnings (e.g. Sakamoto and Liu 2006). Roemer (1982), in the most radical exploitation formula-
tion, saw the just distribution of income as when each actor receives their national per capita
share of income. All other income distributions reflect the relative power of actors in states, mar-
kets and organizations to extract income from other actors. These moral baselines are clearly
analytic abstractions, unlikely to be observed in the real world. To us what matters most theoreti-
cally is what they share, which is an understanding that income is intrinsically associated with
the historically contingent relative power of actors in both organizations and markets, rather than
simple reflections of productivity differences. Regardless of the baseline model, these approach-
es all share an assumption of income distributions as socially negotiated, rather than natural or
inevitable. Rent destruction or creation is expected to respond to shifts in the relative power of
actors in markets or production to make claims on income flows. In the most agentic version this
shift will follow a political process in which organized actors secure and protect their own rents
13

(e.g. Weeden 2002). As presented below, rents may also be produced as a function of unintended
demand, institutional or even ideological shifts. Because market actors rely on the state to create
or endorse the ground rules for market exchange, the state is often an important audience and
actor in rent creation and destruction political processes (Fligstein 2000).
In an application of rent theory Morgan (Morgan and Tang 2007; Morgan and McKerrow
2004) develops an empirical strategy focusing on industry rents, highlighting industries’ shifting
capacities to extract rents from a national market. This approach is broadly consistent with the
well established economic result that both wages and profits tend to rise in industries where one
(monopoly) or few (oligopoly) firms dominate production (Scherer and Ross 1990). Sorenson’s
rent model directs scholar’s attention to additional institutional bases of market avoidance and
rent creation such as state licensing (e.g. Weeden 2002) or the political manipulation of demand
or regulatory structures (Fligstein 2000). We will show that both processes – industry concentra-
tion and changes in regulatory structure – are important for the shift of national income into the
finance sector. Typically, sociological rent theory takes aggregate demand as exogenous to the
process of rent creation. As we will see in the financialization story aggregate demand was not
exogenous. The rise of institutional investors sharply increased demand for financial services and
so are clearly part of the historically contingent growth of finance sector rents and political pow-
er.
Compared to previous applications of rent theory we provide a more detailed institutional
analysis of changes in market power and regulatory structure. Rent shifts have typically been
inferred from shifts in income distributions across industries or occupations. While we follow
this practice we believe that inferences are strengthened by documenting the actual shifts in ac-
tors’ constraints and behaviors as well. This also allows for a closer examination of the timing of
14

income dynamics, which should follow the institutional shifts we argue are producing them. Be-
cause we disaggregate the finance sector into detailed industries we can also observe which ac-
tors during which historical moments realized the increased income associated with financializa-
tion.
The rising share of national income in the finance sector, if it was created by increased
market power linked to deregulation, industry concentration, and financial innovation, likely
came at the expense of other actors in the economy. In a neoclassical economic model one might
be tempted to claim that financialization, because it might increase the efficient allocation of
capital, might have also increased economic activity overall, thereby raising all actors’ income.
However, Stockhammer (2004) and Orhangazi (2008) show that the actual case was that finan-
cialization reduced non-financial firm’s capital investment in new productive assets and saw an
increasing share of their cash flow diverted to the finance sector as increased profits. Fligstein
and Shin (2007) show that, when non-financial firms pursue shareholder value strategies (which
are closely linked to financialization in the discussion that follows), they did not actually produce
increased profitability.
3. The Institutional Roots of Financialization
Market institutions provide both the state sanctioned and culturally recognized rules of the game
and the cognitive maps through which actors, including corporations and regulators, understand
how the market works and their role within it, thereby shaping market strategies and the devel-
opment of markets themselves (Fligstein 2000). In this section we provide a historical analysis
of the institutional shifts in and around financial markets since 1980s. We start from the end of
Post-War economic boom in the 1970s, which was perceived at the time not only as a crisis for
15

the banking industry but also a crisis of U.S. capitalism. It was also perceived as a failure of
Keynesian macroeconomic policies which provided no clear explanation or solution for the
"stagflation" of the time. We document the rise of neoliberal policy model and the solutions pro-
posed to control inflation and stimulate the finance sector. Lastly, we analyze the related devel-
opments in the era of deregulation to outline the systematic reconfiguration of the U.S. economy.
Problems: Stagflation and the Economic Crisis of the 1970s
One can point to the era around 1980 as a watershed in the orientation of the US federal govern-
ment toward the economy in general and economic regulation in particular. The economic crises
of the 1970s centered around the OPEC inspired rise in oil prices, the perceived rise in union and
consumer power, the end of US manufacturing’s global hegemony, and the birth of a low-growth
high-inflation macro-economy. This configuration of threats led to the mobilization of the large
firm corporate sector to push for economic deregulation, lower taxes, and a smaller state (Miller
and Tomaskovic-Devey 1983). These shifts were interpreted at the time as a crisis of US capital-
ism and led to the mobilization of corporate actors to reinvent the system (Vogel 1986). Econom-
ic deregulation in particular was the goal of the business mobilization of the late 1970s (Useem
1983). During this period of recapitalization it is clear that the largest banks and insurance com-
panies were central to large firm leadership networks (Mintz and Schwartz 1985).
In the financial sector this crisis was initially defined in terms of what came to be called
stagflation --the joint occurrence of slow or no economic growth and high inflation. Slow growth
led to fewer outlets for domestic investment. Inflation undermined the traditional banking prac-
tice of borrowing money from customers and lending it to investors. Stagflation led to a sharp
drop in bank profitability (see the late 1970s in Figures 2 and 5). In response, the Federal Re-
16

serve Bank, led by Paul Voker, fought inflation by rapidly increasing interest rates (Krippner fc,
Epstein and Jayadev 2005). This tight monetary policy slowed down inflation in the early 1980s
and lured foreign capital to invest in US interest bearing bonds. Together low inflation and high
interest rates created the conditions for high real interest rates and so high profits for banks, in-
surance companies and any entity extending credit to consumers and non-financial corporations
(Epstein and Jayadev 2005). While tight monetary policy stabilized the income of the finance
sector by taming inflation, it was the resulting deregulation that fundamentally shifted the basic
structure of the economy to favor the financial sector. 10
There is now a scholarly consensus that this crisis was followed by a period of deregula-
tion and emerging neoliberal policies that created the financialization of the US economy. Why
this happened is to some extent disputed. Some authors have assumed that the centrality of the
finance sector to the corporate elite coupled with the sector’s clear monetary gains from market
deregulation suggest that deregulation was a result of the political efforts of the finance sector
(e.g. Crotty 2005). This account would be consistent with the agentic-political model of rent cre-
ation proposed by Sorenson. Others point to political entrepreneurs within the state itself (Prasad
2006); neoclassical economists as intellectual and technical entrepreneurs when traditional Key-
nesian economists, who assumed a stable and positive association between inflation and econom-
ic growth, failed to explain the cause of stagflation (Davis 2009; Fourcade-Gourinchas and Babb
10 In the early 1980s conflicts between an inflation fighting Federal Reserve chief Paul Volker
and a deficit spending Ronald Reagan were resolved with a massive influx of foreign capital,
particularly from Japan, funding deficits and initiating a continuous stream of foreign capital to
feed debt based consumption by consumers, corporations, as well as the US federal government
(Krippner fc).
17

2002), the rise of institutional investors (Davis 2009; Useem 1996), and in probably the most
careful study of financialization as the result of sequential problem solving by state actors with
strong ties to the finance sector (Krippner fc). 11 All accounts agree that the general neo-liberal
consensus made regulation of financial instruments that developed after 1980 unlikely.
Solutions: Finance Sector Deregulation and the Rise of the Neoliberal Policy Model
What at that time was merely a business insurgency brought about by declining profits
and the perceived rising power of consumers and unions has since become institutionalized as a
new normative neoliberal order in which market solutions to almost any governmental problem
became normative (Prasad 2006; Fourcade-Gourinchas and Babb 2002).
Occurring during the “stagflation” of the late 1970s, the first act in finance sector deregu-
lation came from the Supreme Court, which in 1978 ruled in Marquette Nat. Bank of Minneapo-
lis v. First of Omaha Service Corporation that credit card companies could charge whatever was
the allowable interest rate in the state in which they were chartered. This lead to most credit card
companies chartering or rechartering in South Dakota or Delaware, states without usury laws
limiting permissible interest rate charges.
In the late 1970s consumer movements, trying to protect household savings against infla-
tion, supported interest rate deregulation, breaking a long standing political stalemate between
different financial sector interests (Krippner fc). Also responding to the “stagflation” threat to
11 We do not have evidence to adjudicate between these accounts, although we find Kripner’s
(fc) path dependent political argument the most convincing for the specific case of financializa-
tion.
18

anks profitability, the second and probably most profound deregulatory action was the 1980
Depository Institutions Deregulation and Monetary Control Act, in which the US Congress re-
pealed a set of banking regulations in place since the Glass-Steagall Act of 1933. The Glass-
Steagall Act was designed after the financial crash of 1929 to regulate risk in the finance sector,
prevent further concentration of the industry, and to prevent investment speculation from causing
a repeat of the Great Depression. Eliminating many of these institutional protections, the 1980
act allowed banks to merge, removed regulatory control over interest paid on savings accounts,
allowed credit unions and savings and loans to offer interest on checking accounts, and removed
state usury caps on interest rates charged by financial institutions. As a result the act weakened
the distinction between mutual funds, commercial banks and savings and loan firms, leading to a
decline in the traditional banking function of raising money through deposits and loaning money
out for investment purposes. In response to the declining profit opportunities in the traditional
deposit-loan cycle, banks turned to fees for financial services as the source of their income
stream, inventing a host of new financial instruments to absorb the increased investment flow
associated with the rise in institutional investors and diversion of household savings from tradi-
tional savings accounts into financial markets (Davis 2009).
--Figure 4 about here--
In the 1980’s the Federal Reserve allowed bank holding companies to own banks in mul-
tiple states and by 1994 in the Riegle-Neal “Interstate Banking and Branching Act” repealed the
final prohibition on interstate banking. Figure 4 shows the post 1980 concentration of the bank-
ing industry as fewer organizations, now allowed to both merge and operate across state lines,
controlled the rapidly growing financial assets in the economy. During the 1980s and 1990s both
the Federal Reserve and the Securities and Exchange Commission pulled back from their regula-
19

tory role and became a cheerleader for new financial instruments allowing new organizational
arrangements in the finance industry to flourish without regulatory oversight (Fligstein and
Goldstein 2010). Even formally illegal cross-industry activity, such as investment, insurance, and
banking all located in single firm became acceptable, even if still illegal. Eventually, and in re-
sponse to an earlier merger of Citicorp and the Traveler’s Insurance Company, in the Financial
Services Modernization Act of 1999 the US Congress repealed the last regulation on finance
sector behavior from the Glass-Steagall Act, now making it legal for investment banks, commer-
cial banks and insurance companies to combine operations. This lead to the expansion of consol-
idated bank holding companies, which operated simultaneously in all financial markets, created
the consolidated financial services industry in which family and commercial banking, insurance,
and investment services could all be provided by a single firm, and eventually generated the sys-
temic (i.e. concentrated densely networked) risk associated with the financial collapse of the later
2000s. Although the key shifts in the regulatory field that led to financialization happened in the
early 1980s, the 1999 Financial Services Modernization Act increased the concentration of the
finance industry and the centrality of the largest financial institutions to the economy. Davis
(2009) documents numerous instances in which these diversified large general financial service
firms were beset by conflicts of interest and scandals after 2000.
Finally, the Federal Reserve after decades long experimentation with methods to obscure
their political role in limiting wage and employment growth as it prioritized inflation fighting
over employment or wage growth, finally endorsed a policy of letting markets lead policy and by
the end of the Twentieth Century embraced the efficient markets hypotheses which described
financial markets as self regulating. The latter ultimately lead to support from Federal Reserve
officials of bank requests to end the prohibition of multiple financial services within a single firm.
20

Together these shifts in the institutional rules reduced regulatory oversight over current and
emerging investment devices, encouraged financial investment over physical capital investment,
and unleashed speculation in financial assets. Because these policies led to increased volatility in
interest rates and stock market performance they also encouraged the creation of new financial
instruments to shift and profit from risk, ranging from variable rate mortgages, to credit default
swaps, to mortgage based and other derivative securities (Krippner fc).
Fligstein and Goldstein (2010) refer to the refusal of the Federal Reserve Bank and the
Securities and Exchange Commission to regulate new financial practices as a form of regulatory
capture.
“This disjuncture between the regulators' actual role and their avowed role led to a
type of regulatory capture. As the activities of banks expanded and they invented more
and more financial products, bankers were consistently able to convince regulators and
the executive and legislative branch of the government to stay away from regulating
the market (Fligstein and Goldstein, page 6).”
Institutional Shifts: Rise in Financial Sector Income and Finance Conception of the Firm
Banking deregulatory happened in tandem with and encouraged other institutional shifts.
Prior to 1980 commercial banks in particular had been pressing for deregulation particularly in
their ability to merge, operate across state lines and for interest rate flexibility on both loans and
savings accounts. This reflected not simply a rejection of regulation but attempts to increase
market penetration and the scope of their operations. Declines in domestic investment by US
manufacturing firms coupled with surges in bank deposits associated with the rise of capital sur-
pluses in the OPEC and European countries also led to increased deposits in the US banks (To-
21

maskovic-Devey and McKinley 1981). The rise of institutional investors, both private (e.g.
pension funds) and public (e.g. countries running budget surpluses such as Japan in the 1980s
and China more recently) provided a steady source of investment capital to promoted continued
financialization (Orhangazi 2008).
At the same time the rise of the finance conception of the firm as a bundle of tradable as-
sets, replaced managerial commitments to investment and innovation in specific markets (Fligs-
tein 2001, Davis 2009). This produced a fundamental change in managerial behavior so that
finance oriented managers came to control major corporations and short-term planning to in-
crease stock price became the primary managerial focus. This shift to a shareholder value con-
ception of the firm was reinforced by the linking of top management pay to stock options rather
than long term market share, sales, or production based profit. Financialization, and particularly
the rise in long term real interest rates, also encouraged managers to invest in financial instru-
ments rather than in production.
The financialization of the economy both allowed and encouraged financial speculation.
While blaming the recent financial crisis simply on speculation (e.g. Schiller 2008) misses the
facilitating institutional organization of the economy, the post 1980 period is remarkable for a
series of financial bubbles driven by speculative herding behavior among investors including the
early 1980s international debt crisis, the real estate bubble and savings and loan crisis of the mid-
1980s, the stock market run-up and collapse of the late 1980s, the dot-com bubble of the late
1990s, the hedge fund expansion in the late 1990s, and the real estate and stock market bubbles
of the 2000s.
Similarly, financialization has encouraged corporate leaders to switch their investment
strategies from long to short term and from physical to financial investments. The increased fi-
22

nancial engagement of non-financial business, the rise of shareholder activism and the develop-
ment of a market for corporate control shifted managerial orientations from long-term goals of
corporate growth to short-term goals of profitability (Useem 1993, Stockhammer 2004, Davis
2009). This shift made investment in new productive capital less attractive and financial invest-
ment more. The expansion and velocity of stock market activity led to increased volatility in
stock holding from an average length of stock ownership of five years prior to 1980 to only a
single year by 2002 (Crotty 2005). Thus the discipline of the stock market upon corporate leaders
switched from long (or at least medium) term to short-term performance. Since during the same
period CEO pay became tied to stock performance, the rise of the finance sector shifted the be-
havior of non-financial firms away from long term capital investment into short-term financial
manipulation. Nonfinancial firms increasingly invested in financial instruments instead of their
core businesses, going by one estimate from 28% of total investments in financial instruments
before 1980 to fully half by 2000. At the same time the financial sector was able to absorb an
increasing percentage of non-financial corporation’s cash flow, rising from less than 30% of cash
flow paid to interest, dividends and stock buy backs prior to 1980 to as high as 78% afterward,
with a long term average between 1980 and 2000 of 54% of corporate free cash going to inves-
tors rather than reinvestment in productive capacity (Davis 2009). Fligstein and Shin (2007)
show that when firms pursued shareholder value strategies such as mergers and layoffs, and in-
vestments in labor saving technology it led to reduced employment particularly of unionized
workers, but did not lead to increased profitability.
Both the final elimination of the prohibition of cross-industry financial activity and the
accelerating income shifts into the sector after 1999 suggest that if anything financialization dee-
pened in the 2000s. The stock market collapse early in the new century was quickly followed by
23

a real estate bubble fueled by low interest rates and rising housing prices. The finance sector fur-
ther inflated this bubble through the aggressive marketing of sub-prime mortgages to feed their
profitable business in mortgage backed securities. 12 In a particularly thorough analysis of this set
of events Fligstein and Goldstein (2010) show that this market was created by a limited set of
financial institutions participating in all aspects of the process, with collusion from the rating
agencies that valued risky securities as AAA investments and a set of federal regulators who
deeply believed that financial markets were efficient and self-regulating. Their analysis is impor-
tant in revealing the actor-network structure that produced the unstable financial market that, at
least temporarily, brought the period of financialization to a halt.
--Table 1 about here--
We summarize this institutional account in Table 1. This account demonstrates the in-
creased power of the finance sector to structure its market. It also shows that the construction of
rent opportunities involved multiple actors and is not simply the result of self-conscious political
influence from the finance sector. While finance sector political influence increased across this
period, interaction with other actors was also critical in generating finance deregulation and the
more general financialization of the political economy.
Krippner’s (fc) analysis of financialization suggests that policy change came from a se-
ries of ad hoc and seemingly independent policy moves, all of which led to abundant credit and
relaxed regulation of markets. In contrast, rent theory tends to focus on political actions to secure
or stabilize market rents. While the finance sector certainly had done the latter, Krippner’s ac-
12 Although Figure 2 suggests a retreat in financial sector profit as a share of all profit after 2003
this primarily reflects a growth in profits in other sectors of the economy. Absolute finance sec-
tor profits soared and the sector as a proportion of GDP continued to climb through 2006.
24

count suggests a certain happenstance in producing the former. On the other hand, if we accept
the evidence (Useem 1983; Mintz and Schwartz 1985) that the finance sector was central to both
the original political mobilization of the capitalist class and their internal power structure than
Krippner’s account might be tempered by a recognition that if the path of deregulation had not
developed in a way that seemed at the time to be conducive to finance sector perceived interests
one would imagine a more active resistance.
This account also suggests that institutional investors, both domestic and international,
played a role by creating increased demand for financial investments. Conventional sociological
rent theory treats demand as a constant. Thus while the role of market power derived from indus-
try concentration and political power to repeal, define and elude regulation are clearly important
in this case, the demand for financial service and speculative returns from institutional investors
certainly mattered as well. Of course, the lack of regulatory structure made these investments
more attractive and the rise of financial speculation and innovation created a self-fulfilling cycle
of high expected returns leading to new institutional and eventually household investments in
financial assets. One can over tell the demand story, of course. In the absence of recurrent finan-
cial bubbles, investors may have turned to invest in productive, rather than financial, assets. In
the next section we turn to our analyses of the income rents accruing to the finance sector as a
result of these institutional transformations.
4. The Distribution Consequences of Finance Sector Rents
We now turn to the distributional consequences of the transfers of income rents into the finance
sector. The analysis will contrast three periods with distinct institutional implications for rent
accumulation: the regulatory period (1940-1980); the deregulation period (1980-1999), and the
post-2000 consolidation of the bank holding company, the real estate bubble, and innovations in
25

derivative markets most famously mortgage backed securities. We proceed first by documenting
industry specific trends in the share of capital profit into the financial sector. Following rent
theory, our expectation is that actors who are relatively more powerful in market exchange, or in
the case of employees within organizations in the finance sector, will accumulate increasing
shares of national income. 13
--Figure 5 about here--
Figure 5 disaggregates profits by detailed industry. Consistent with our institutional ac-
count, before 1980 finance sector profits as a percentage of all profits in the economy were either
stable (security, insurance, and real estate) or slowly growing (banking). Banking profits drop
sharply during the high inflation period at the end of the 1970s precipitating the 1980 Depository
Institutions Deregulation and Monetary Control Act. Consistently, after 1980 it is banks and later
bank holding companies that reaped the most and longest term increased profits from this and
later acts that repealed various provisions of the 1933 Glass-Steagall Act. Again, in response to
falling bank profits in the early 1990s two further banking deregulation acts were passed -- the
1994 Riegle-Neal “Interstate Banking and Branching Act and 1999 Financial Services Moderni-
zation Act. After 1999 we see a second and even steeper surge in the proportion of national prof-
its accumulated by banks and bank holding companies.
13 Here we focus on income shifts into the financial sector during the period of financialization.
This implies that actors elsewhere in the economy realized income losses. It also suggests that
increasing national income inequality during this period may have been influenced by the shift of
income into the finance sector. We do not examine these potentially important income shifts in
this paper but are working toward that goal in our current work.
26

The other finance sector industries also show profit gains but they happen later and are
less dramatic. The insurance industry realized strong gains across the 1980s, declines across the
1990s and more strong gains after 2000. Using 1980 as a baseline bank profits as a proportion of
all profits in the economy grew 300-400% over the next thirty-eight years. During the same pe-
riod insurance profits as a proportion of all profits grew by slightly less than 100%. Real Estate
profits grew strongly after 1990, but by 2008 were a smaller proportion of the total than they had
been in 1970. Securities, Commodities and Investments, the industry of investment banks, hedge
funds and mutual funds, shows great year to year fluctuations in profitability and a sustained
boom as a proportion of national profits only after 2000. The most recent bubble was clearly
profitable for this industry. Most striking is that the long term trend prior to 1994 was low, no or
negative profits in this Securities, Commodities and Investments industry. The deregulation of
banking and the financialization of the economy seem to have been most influential in inflating
banking sector profits after 1980, with weaker gains in insurance, and in the security industry
only after the 1999 Financial Services Modernization Act which allowed insurance, investment
banks and commercial banks to provide the same services in one firm.
--Figure 6 about here--
In Figure 6 we disaggregate the employee share of increased income in the finance sector
by industry. Again, employee income as a share of national income is remarkably stable prior to
1980. After1980 employees in all four finance sector industries experience earnings growth. The
growth in employee income in the Securities, Commodities and Investment industry is extraordi-
nary. Total compensation goes from 1.5 of its per capita national share to a remarkable 4 times
27

its per capita share. 14 The financialization of the economy reflected the rise of institutional inves-
tors, rapid turnover in stock and commodity markets and a generally intensification of finance
related activities. It is the commission based employees in this industry who reaped great earn-
ings benefits from the increased volume and velocity of investment activity. Since we saw in
Figure 5 that this same industry had weak profit gains, and those gains did not commence until
after 1999 it leads to the conclusion that financialization at least before 1999, primarily benefited
the employees, rather than owners, in the security industry. This result is in contrast with banking
and insurance in which employees made only small gains in total compensation after 1980 and
those gains tended to flatten after 2000 even as absolute profits accelerated. Real estate compen-
sation on average is flat and near the national average across all years. 15
Taken together Figures 5 and 6 suggest that income rents associated with financialization
were realized primarily by capital in the banking, insurance and real estate industries and by em-
ployees in the securities industry. Banking, in particular, seems to have profited most consistent-
ly from the deregulation of financial markets and the resulting ability to collect economic rents
14 Analyzing first quarter wage date (in order to capture bonus payments) for the investment
banking and securities industry, Sum et al (2008) report that in 2007 that workers employed in
this industry earned $6,891 per week nationally, $16,918 per week if employed in Manhattan.
The average worker nationwide earned $884. Between 2006 and 2007, just prior to the collapse
of the financial system, first-quarter wages in the securities and commodities industry grew a
remarkable 16.4% nationwide and 21.5% in Manhattan.
15 Of course, small gains at the industry level can mask large inequalities within industry. The
separate identification of bank holding companies after 1999 clearly shows a much higher aver-
age income in these mixed banking-security-insurance hybrids than in conventional banking.
28

from the society overall. The employees of security and commodity firms, which were histori-
cally organized as partnerships, were able to capture windfall compensation from the increasing
flow of investment activity.
To further explore the distribution of income within the finance sector we turn to data on
individuals from the Current Population Survey. These data are self-reports and include top-
codes for salaries, thus truncating the really high compensation reported by Rauh and Kaplan
(2007) and widely in the press during and after the financial crisis. 16 Figure 7 reports the simple
trends in annual earnings for employees of the various finance sector industries. 17 The basic
trends we saw in Figure 6 are repeated and the basic ratios are about the same for Banks, Insur-
ance and Real Estate. The clear exception is in Securities, Commodities and Investment, where
salaries while still rising much faster than in the non-financial economy, climbing from 1.5 to 3
times the national average, rather than soaring from 1.5 to 4 (as in Figure 6 and including all
compensation). Reflecting both sampling and earnings top-codes, the CPS estimates are least
accurate for capturing the wage rents accrued by the very high earners in the Securities, Com-
16 In the financial sector there are many more incidents of top-coding: in Banking, there are on
average twice as many top-coded observations as in non-finance industries, in Insurance there
are on average 2.4 as many top-coded observations, whereas in Other Finance Industries there
are on average 13 times as many top-coded observations (Phillippon and Rashef 2007).
17 Annual earnings reported here are adjusted into 2000 dollars by Consumer Price Index. Fol-
lowing Philippon and Reshef (2009:37), we multiply top-coded incomes in all survey years until
1995 by a factor of 1.75 to adjust the underestimation of relative earnings in the financial sector.
After 1995 the CPS use group means within top-code categories to impute a top-code value.
29

modities and Investment industry. It is these individuals that Rauh and Kaplan (2007) show are
increasingly in the top one-tenth of one percent of earners nationally.
--Figure 7 about here--
Using similar data, Philippon and Reshef (2009) suggest that up-grades in the education
level of employees and the skill mix of jobs may account for at least some of the rising incomes
in this sector. This is an argument that the sector became more skilled, rather than there was an
increase in income rents to the average employee in the sector. 18 Appendix B reports shifts in
sector and industry employee education and occupational structure. The proportion college edu-
cated grew faster than in the rest of the economy in banking and securities, but not in real estate
or insurance. Similarly, it is in the banking and security industries in which we see an upgrading
of the occupational structure during this period.
Figure 8 reports predicted sector specific annual income trends based on a regression
model that adjusts for shifts in employee experience (age), education, sex, race and hours of
work as well as in occupational structure over the time period. 19 The same basic pattern of rising
average employment income is evident for each industry in Figure 8, although the peaks are not
18 Of course, in both relative power and exploitation approaches, skill or occupational power are
bases for rent extraction within organizations. Many popular commentators have seen skilled
workers flocking to this sector because of the high incomes, rather than the high income being
produced by the skilled actors. Both Crotty (2009) and Roth (2004) suggest that the investment
firms in particular select on the bases of social similarity with existing traders, rather than skill.
19 The basic regression model is estimated in OLS separately for each year and takes the follow-
ing conventional form: Annual Earnings = b0 + b1 Education + b2Age + b3Sex + b4Race +
b5Annual Hours of Work + b6-8 Occupation Groups + b9 Finance Industry + e.
30

as dramatic. In the Security industry rents rise to about 2.25 times the national average, rather
than 3 in Figure 7. For the other three finance sector industries rents rise as well, to 1.17 for real
estate and 1.35 for insurance and banking. Controlling for compositional shifts explains little of
the rise in bank and insurance earnings and none of the rise in real estate. Although the security
industry sees strong gains in proportion college educated and in the share of high-skilled occupa-
tions our models do not isolate causal order. It is entirely possible, and we think likely, that both
of these shifts were a response to increased industry income rent opportunities rather than the
increased income being caused by shifts in the education level of employees or the occupational
structure of the industry.
--Figure 8 about here--
Phillipon and Reshef (2009) show that after 1980 the returns to college degrees grew
faster in the finance sector than in the rest of the economy. They also suggest but do not demon-
strate that occupational shifts may have produced an upgrading of the skill base of the finance
sector labor forces. It was certainly the case that the rising wages in this sector attracted high
performing students from elite colleges but it seems unlikely to us that productivity associated
with individual talent, rather than the institutional changes we have outlined, produced the gigan-
tic growth in profits and earnings in this sector. Oyer (2008) provides evidence consistent with
this intuition, finding that investment bankers are largely “made” on Wall Street rather than bring
some set of a priori superior skills to work. Similarly, Roth (2004) finds that the principle selec-
tion mechanism for Wall Street firms is not productivity difference but social backgrounds.
To further examine the income distribution within each industry, we extend our regres-
sion models to explore education, occupation, sex and race specific trends in economic rents for
employees in the finance sector. What we find is that the substantial increase in income rents to
31

finance sector employees were not extended to all employees. In all four finance sector industries
the post-1980 rise in industry rents went primarily to highly educated employees in managerial,
professional and sales occupations. There were limited or no income benefits to lower level oc-
cupations and less educated workers. In addition, for each industry white men see income growth
beyond their human capital and occupational positions in all four industries after 1980, while
minority men and women and white women display flat income trajectories (analyses available
upon request). Thus compared to national trends in income inequality (e.g. Morgan and McKer-
row 2004) the finance sector is unusual in that there are increased earnings rents to white men,
even net of their privileged occupational position.
In order to gauge the aggregate income rents transferred to the finance sector during the
period of financialization we explored a counterfactual analysis in which we ask what would
current profit and compensation levels in the finance sector look like if their income claims and
employment as a proportion of the national economy had stayed at the 1948-1980 historical le-
vels? 20 We approach these estimates with two simple counterfactuals, both of which ask what if
the regulatory institutional shifts in the finance field associated with increased concentration,
20 One can, of course, imagine much more elaborate counterfactuals. For example, if we assumed
that financialization reduced real economic growth by diverting capital investment out of the real
economy, than we might want to estimate how much income was lost by the rest of the economy
because of financialization. On the other hand, some might argue that financialization attracted
foreign investment to the US which otherwise would have gone elsewhere thus increasing aggre-
gate income beyond what would have happened in its absence. We suspect that the truth lies
closer to the former than the latter, but do not have any sound basis upon which to derive plausi-
ble alternative GDP growth rates.
32

egulatory relaxation and a general belief by all actors that finance markets were smart and self-
regulating had not happened? To do this we simply assume that the compensation per employee,
employees as a share of total employment, and profit shares in the economy stayed at pre-1980
levels. In the first counterfactual we ask what if the longer term average income shares between
1948 and 1980 had prevailed after 1980. In the second we estimate a linear trend from 1948 to
1980 and use that trend to predict post-1980 expected income. Because compensation trends
were so stable prior to 1980 there is little difference between the two estimates. Because there
was already an upward slope to financial profits as a proportion of the economy before 1980, the
trend counterfactual produces a somewhat smaller estimate of net profit flow into the industry as
a result of financialization. Since the trends both before and after 1980 are different for each in-
dustry we estimate the counterfactuals separately for each industry and then sum to the sector
level. 21
--Table 2 about here--
Table 2 displays estimates of the net additional income captured in the finance sector as
profits and employee compensation since 1980. Our estimate is that financialization transferred
somewhere between $4.5 and $5.1 trillion dollars in income into the finance sector between 1980
and 2008. The lion share, about 65%, of this increased income was earned by banks and bank
holding companies and of that money up to 90% as bank profits. Although compensation rose
21 The compensation estimates in Table 1 include Holding Company income in the finance sector
after 1998. This corresponds to shifts from SIC to NAICS coding and our visual inspection of
shifts in income during the period of overlap in the two systems suggest most income was in fact
earned in the finance sector. If not included compensation estimates would be only $34 million
lower over the entire period.
33

dramatically in real dollars per person, the aggregate transfer of income to employees was small
compared to the surge in finance sector profits over the period. Importantly, and consistent with
the institutional story much of this income transfer happened after 2000. About half of the $4.5-
5.1 trillion surge in profits happened after 2000. The comparable figure for compensation is
54.5%.
5. Conclusion
We have provided evidence that following the institutional shifts in finance sector regulation and
the resulting financialization of the economy and market concentration into fewer more powerful
firms there has been a surge in income –both as profits and earnings- into the financial sector. By
2008 almost a quarter of GDP and more than a quarter of profits accumulated in the finance sec-
tor. Employee compensation went from being about average for the economy overall, to about
60% higher than the rest of the economy. These shifts represent a transfer of between $4.5 and
$5.1 trillion dollars in income into the finance sector, mostly as profits. To put this in perspective
5.1 trillion dollars were about 13% of all increased income (profits + compensation) in the pri-
vate sector between 1980 and 2008. Or in terms of the short term cost of the financial collapse,
five point one trillion dollars is more than twice the size of the IMF’s estimate of the global as-
sets lost when the US sub-prime real estate bubble burst (Lewis 2010).
Of course, actors in the finance sector would probably interpret this as income earned ra-
ther than income transferred. From the perspective of rent theory there has clearly been a shift in
the ability of these actors to accumulate a larger share of national income. This happened as
market competition and regulation decreased, providing the institutional and market power for
this transfer of income to occur. It is no doubt the case that the transfer of income would not have
34

occurred if finance sector actors had failed to take advantage of their increased market power, so
there was clearly considerable invention on their part to produce the surge in earnings. From the
point of view of actors within these firms this would have looked like a surge in individual and
collective productivity. But, of course, we can all tell stories that explain our market successes
in terms of our individual talent.
When we disaggregate by detailed industry we find that the lion share of the profits flow-
ing into the financial sector went to the banking industry. This surge began immediately after the
1980 deregulation of the industry and continued into the current century, peaking at 21% of all
profits in the economy in 2003. The other industries saw growth in profits later - insurance after
1985, real estate after 1991, and securities after 2000. From the perspective of capital, it was
banks and bank holding companies and their owners that prospered from the financialization of
the US economy. For the securities and real estate industries it is not clear that their surges in
profit should be interpreted in terms of financialization. In both cases they follow financial in-
vestment bubbles, rather than precede them, and do not have the long term stable character of
what has happened in banking (and among bank holding companies after 1999).
We also explored the extent to which employees in the finance sector benefited from the
increased industry rents tied to financialization. In general the result is that many employees did
potentially benefit from increased industry rents. Employment in the sector doubled. White men
and those with college educations prospered. Managerial, professional and sales occupations, the
majority of all employees in each industry, saw strong earnings gains. 22 Since this happened
across the same period that saw increased earnings inequality across the economy, tied in partic-
22 In securities 82% of employees are managers, professional, or sales. The comparable figures
for banking, insurance, and real estate are 53%, 70% and 62% of all employees.
35

ular to higher education and professional/managerial status, the fact that earnings trajectories
were even steeper in the finance sector is good evidence that this was not simply a secular trend,
but an industry rent sharing with high status/power employees in the finance sector.
The Security, Commodity and Investment industry stands out in terms of employee earn-
ings, with substantially above market income earned by managers, professionals and sales occu-
pations. Since these estimates of earning returns utilize the CPS and the CPS does not capture the
very highest earnings (because of both top coding and sampling), we are no doubt underestimat-
ing the economic rents going to the highest earners. A comparison of Figures 6 and 7 makes
clear that it is in the security industry that we are most grossly underestimating total income to
the highest earners. Using the NIPA data, which includes all compensation, by 2008 the security
industry was paying its average worker four times the national average (Figure 6). Since our ana-
lyses suggest that the income gains are concentrated in the most powerful occupations in this
sector it is clear we are grossly underestimating the employment rents accumulated by powerful
employees in the securities industry. Our disaggregated estimates suggest that between 1980 and
2008 there were no aggregate profit rents in the securities industry, while compensation surged.
Even after 2000 when we detect profit based rents in this sector 88% of income rents still ac-
crued to employees. For the other three industries the CPS and NIPA estimates in Figures 6 and
7 are clearly much more similar. Here we can conclude that managers, professionals and sales
workers profited from the surge in industry profits, even if their earnings were considerably more
modest than those of their colleagues on Wall Street.
The evidence presented in this paper suggests that the financialization of the US economy
documented by Krippner (2005; fc) and others prior to 2001 accelerated through 2008. After
2001 the concentration of GDP in the finance sector continued through 2008. The concentration
36

of total national profits in the finance sector reached a recent peak in 2003, although absolute
profitability continued to climb until 2006 when the real estate market began to fail.
We disaggregate these income gains within the finance sector by detailed industry, be-
tween labor and capital, and among classes of employees. Here we have a series of key findings.
First, the lion share of the profit growth in this industry went to the banking industry, including
the bank holding companies created after the 1999 Financial Services Modernization Act. It was
these bank holding companies (plus the insurers AIG, Fannie Mae, and Freddie Mac, as well as
GM and Chrysler) that were the major beneficiaries of the 2008-2009 federal bailout of the col-
lapsing financial system. Thus, the bailout of the financial system, no matter how important it
was to preserve the world financial system, saved a set of firms that had since 1980 increasingly
been accumulating the economic surplus of the entire economy. After 1990 the banks consistent-
ly controlled more than 15% of total profits in the economy, rising to more than 20% after 2000.
Prior to being bailed out they had already extracted between around 3.8 trillion dollars in extra
profits, at least relative to their post-WWII historical norm.
We intend that this paper makes a contribution to rent theory and stratification analyses
more generally. These literatures have tended to observe income dynamics and infer the
processes that generated them. By outlining the institutional transformations that made industry
rents in the finance sector possible we have tried to make visible the political and market me-
chanisms producing and distributing the increased national incomes realized in this sector. By
disaggregating by detailed industry, between capital and labor, and among classes of labor we
have also contributed to a multi-actor view of the rent creation and distribution process. We think
that our approach is methodologically useful in that it helps establish empirically when we ex-
pect shifts in income to follow institutional transformations. The basic finding that it is in the
37

anking industry that we see longer term shifts in both profits following the 1980 deregulation of
the industry and that profit accumulation accelerated after the final 1999 elimination of bans on
multiple product finance activity we believe substantially strengthens the inference that the ob-
served rent process is driven by deregulation produced financialization. The insurance and real
estate industries show the same basic patterns but they are neither as strong nor as sustained.
The security, commodity and investment industry stands out for being a case of employee, rather
than employer, driven rent extraction.
We think that rent theory is more plausible when the evidence includes accounts of actual
institutional practices and political adjustments of market rules that produce (or destroy) income
rents. The introduction of an institutional account is we think a useful contribution to market and
political power based explanations of rent, since the actual bases of power are revealed rather
than assumed. In presenting this institutional account we think we have discovered another mod-
ification to rent theory, which we think of as a multi-actor path dependent alternative to simple
power stories. Because rent theory has typically not observed the institutional process, it has
been able to tell a simple single actor market power story such as banks control the government
(Crotty 2009). What we observe is a more complex path dependent process, in which low bank
profits in the high inflation 1970s coupled with consumer demands for higher interest rates led to
the initial deregulation of the industry. In the 1980s and 1990s the rise of institutional investors
fueled financial innovation in the deregulated industry. The 1999 repeal of Glass-Steagall con-
straints on finance sector service coupling led to the creation of the giant multi-service bank
holding companies that dominate US financial markets of all types. By the 2000s the search for
ever expanding profits generated the real estate bubble to provide mortgages to feed a completely
unregulated market in mortgage based securities and their risk hedging partners credit default
38

swaps. Clearly, the market and political power accounts in rent theory are present in this series of
events. But so are other actors: consumers looking for interest rates better than inflation, institu-
tional investors with cash to invest, corporate CEOs and shareholders seeking to maximize short-
term profits for immediate rewards, and even the Federal Reserve Bank attempting to obscure its
political role in producing unemployment and slowing wage growth. So, while we do not dispute
the fundamental role of power in producing market rents, there is also a great deal of path depen-
dency produced by multiple actors, attempting to solve multiple problems as they arise in real
historical time.
We also document that the industry rents produced by financialization went to some
classes of labor as well as to capital. Manager, Professional and Sales occupations in each of
these industries reaped growing above market earnings after 1980. In the security industry em-
ployee earnings grew most rapidly and preceded the onset of increased profitability. For the se-
curity industry growth in the compensation of powerful employees, rather than high profits
seems to have characterized the period of financialization. Davis (2009) reports that investment
banks historically were organized as partnerships rather than corporations, this may be the insti-
tutional precursor for the high returns to employees we observe. In addition, in both insurance
and the security industry increased average employee pay preceded increased industry profitabil-
ity. In both case it seems likely that performance based compensation schemes for managerial
and sales personnel preceded and perhaps even helped create the profit surges associated with
investment and real estate bubbles. Crotty (2009) agrees that these are economic rents and goes
on to suggest that the very high compensation of “rainmakers” in the investment community was
a source of the systemic risk taking that eventually led to the collapse of the world financial sys-
tem. Populist anger at the size of bonuses at investment banks has clear roots in the current fi-
39

nancial crisis. Our analyses suggest, however, that employee compensation is only between 26
and 40% of the long-term income transfers into the finance sector.
The 2008 collapse of the finance sector is clearly important in a historical sense. It is also,
potentially a moment of rent destruction for this sector. We already know that in 2008 profits fell
into the negative range across the industry but rebounded strongly in 2009. Philippon and Reshef
(2007) show a tremendous drop in finance sector rents during and after the Great Depression of
the 1930s. Clearly some of this was the shock of the collapse of the banking system, but much
reflected the ensuing regulation of the industry. Thus the contemporary collapse of the finance
sector and re-inflation through the federal bailout is likely to be interesting theoretically and po-
litically as a potential moment of rent destruction. At this point we know little about the conse-
quences of the collapse of this sector, but sociological rent theory would suggest that politically
more powerful actors (banking, insurance and securities) may be able to defend and perhaps pre-
serve their existing market institutions and the resulting capacity to extract rents. This is certainly
what national politics in late 2009 and 2010 looked like. We see repeated media and political
attention to the high wages and bonuses paid to employees in the finance industry. We also see
major banks and bank holding companies struggling to repay federal bailout money as quickly as
possible, often rationalized as necessary in order to pay high salaries to their top employees.
Finally, and most consequentially for future income distributions there is a struggle between
banks and other actors over the appropriate form of new regulations to manage systemic risk and
protect consumers from rent extraction. What form these regulations take will likely determine
the degree to which the finance sector will be able to continue to accumulate large proportions of
the national income.
40

Our analysis points to the federal government as both the source of the deregulation of
the finance sector and as failing to regulate emerging financial markets and innovative financial
instruments. If neoliberalism was a policy and intellectual movement away from state regulation
and towards markets, financialization was perhaps its most fundamental product. Certainly the
transfer of national wealth into the finance sector was one of its most dramatic consequences.
Now that that same sector has crippled the world economy while creating conditions of profound
economic uncertainty for investors, unprecedented federal spending deficits in the US and else-
where, and intense suffering for households, it seems clear that both the economic power of the
finance sector and the consequences of that power for income distributions should become cen-
tral to future economic policy.
It may be the case, however, that the neoliberal cultural embrace of markets in general
and financial markets in particular will prevent the recognition of both the risk associated with
pooling so much of national wealth in the hands of a few actors in the finance sector and the con-
templation of any solutions other than market solutions. In this vein Krippner (fc) points out the
problematic nature of post-crisis efforts to regulate the finance sector “Under neoliberal econom-
ic management… the state’s avoidance of responsibility for economic outcomes may shield poli-
cy makers from public scrutiny, but it does not build a foundation for state action” (Krippner fc,
p. 230). The neoliberal obscuring of the essentially political basis of market institutions robs state
actors of a language with which to lead reform. In this sense, the political choices of the Federal
Reserve to obscure its role in creating the economy may prevent it from acting to save it.
We can be sure from our analyses that the generous compensation of employees in the
Securities Industry is a result of financialization, but it also stands out for being embedded in a
labor centered model of rent extraction. In the securities industry partners and powerful em-
41

ployees have reaped the rewards associated with the financialization of the US economy. In in-
surance, banking, and real estate it is the owners of capital who have accumulated most of the
economic rents produced through financialization, although only in banking and for the new
bank holding companies does this seem to be a long term, recurring transfer of national income.
Of course, after 1999 the distinction between banks, insurance and investment firms was consi-
derably weakened. The movement of investment activities into bank holding companies may
weaken the influence of the employee compensation model in the old securities industry, as these
activities become absorbed in more bank-like organizations and the super earnings of traders are
transferred into super profits of bank holding companies. In the absence of new regulation (or
taxation) we can expect that these super-sized diversified financial institutions will only increase
their ability to absorb the income generated by the US economy. If that income is again depen-
dent upon or is in a positive feedback loop with speculative financial investments it is only a
matter of time before the next bubble and systematic crash.
This paper is written at the beginning of 2010, just as Wall Street is making record pay-
ments to its employees (Luchetti and Grocer 2009) and Ben Bernanke was reconfirmed as the
Chair of the Federal Reserve Bank. There is thus some reason to expect that there will not be a
fundamental shift in the regulatory approach to the finance sector and that finance as the new
religion of economic policy may continue its sovereignty (Davis 2009) and continue to benefit
from the income rents that accrue to its cultural as well as economic centrality. Somebody, of
course, always pays the rent. In this case it seems to have been the rest of the economy, both
non-financial firms that paid increasing portions of their incomes to the finance sector and
households whose wages were restricted by the declining market power of their employers and
their increased payments of fees and interest to a financial sector ever more clever at extracting
42

ents from other actors in the economy. Although we have not demonstrated it here, there is also
the disturbing possibility that the financialization of investment will lead to long term neglect of
investment in productive assets by institutional investors in favor of financial speculation in
search of short term returns.
43

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%GDP
10 15 20 25 30 35
Figure 1. Finance and Manufacturing Value-Added as Percent of US GDP
1950 1960 1970 1980 1990 2000 2010
Year
Finance
Manufacturing
Source: Bureau of Economic Analysis, Gross-Domestic-Product-(GDP)-by-Industry Data series: Classification:
NAICS 1947-2008
49

%Profits
10 20 30 40
Figure 2. Finance Sector Profits Before Tax and Realized Profits as Percent of all US Profits
FIRE (SIC, PBT without CCA*)
FIRE + Holding Companies** (NAICS, PBT without CCA)
FIRE (SIC, with CCA)
FIRE + Holding Companies (NAICS, with CCA)
1950 1960 1970 1980 1990 2000 2010
Year
Source: Bureau of Economic Analysis, Table 6.17 Corporate Profits Before Tax by Industry and Table 6.22 Corporate Capital Consumption Allowance by
Industry: Classification: SIC1972: 1948-1987, SIC1987: 1988-2000, NAICS2002: 1998-2008
*Realized Profits do not include Capital Consumption Allowances, Profits before Taxes include Capital Consumption Allowance. Profits reported here are
corporate profits with inventory valuation adjustment before tax and dividends are paid. We use realized profits, instead of cash flow (Krippner 2005), to
conceptualize the sum of profits before tax and capital consumption allowance. Cash flow is commonly used to indicate the sum of undistributed profits
(i.e. profits net of dividends and tax) and depreciation allowance. Realized profits can also be interpreted as profits before tax with inventory valuation and
capital consumption adjustments plus consumption of fixed capital.
** This category includes non-financial holding companies.
50

Ratio
1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7
Figure 3. Finance Compensation Share over National Employment Share
FIRE (SIC)
FIRE (NAICS)
FIRE + Holding Companies* (NAICS)
1950 1960 1970 1980 1990 2000 2010
Year
Source: Bureau of Economic Analysis, Table 6.2Compensation of Employees by Industry and Table 6.5 Full-Time Equivalent Employees by Industry:
Classification: SIC1972: 1948-1987, SIC1987: 1988-2000, NAICS2002: 1998-2008
* This category includes non-financial holding companies.
51

Institutions
8000 10000 12000 14000
Figure 4. Total Numbers of Firms and Total Assets of FDIC Commercial Banks 1934-2007
Total Institutions (left axis)
Total Assets (right axis, in millions)
1950 1960 1970 1980 1990 2000 2010
Source: Banking Statistics, FDIC
Year
0 2000 4000 6000 8000 10000 12000
52

%Profits
0 5 10 15 20
Figure 5. Finance Realized Profit (without Capital Consumption Allowances)
as Percent of all Profit by Detailed Industry
Bank & Credit (SIC)
Securities, Commodities & Investment (SIC)
Insurance (SIC)
Real estate (SIC)
Bank & Credit (NAICS)
Securities, Commodities & Investment (NAICS)
Insurance (NAICS)
Real estate (NAICS)
Holding Companies*
Bank & Credit + Management (NAICS)
1950 1960 1970 1980 1990 2000 2010
Year
Source: Bureau of Economic Analysis, Table 6.17 Corporate Profits Before Tax by Industry and Table 6.22 Corporate Capital Consumption Allowance
by Industry. Classification: SIC1972: 1948-1987, SIC1987: 1988-2000, NAICS2002: 1998-2008
* This category includes non-financial holding companies.
53

Ratio
Bank & Credit (SIC)
Securities, Commodities & Investment (SIC)
Insurance (SIC)
Real estate (SIC)
Bank & Credit (NAICS)
Securities, Commodities & Investment (NAICS)
Insurance (NAICS)
Real estate (NAICS)
Holding Companies*
1.0 1.5 2.0 2.5 3.0 3.5 4.0 Figure 6. Finance Compensation Share over National Employment Share by Detailed Industry
1950 1960 1970 1980 1990 2000 2010
Year
Source: Bureau of Economic Analysis, Table 6.2Compensation of Employees by Industry and Table 6.5 Full-Time Equivalent Employees by Industry
Classification: SIC1972: 1948-1987, SIC1987: 1988-2000, NAICS2002: 1998-2008
* This category includes some non-financial holding companies.
54

Ratio
1.0 1.5 2.0 2.5 3.0
Figure 7. Observed Annual Earnings Relative to the Non-finance Economy
by Detailed Industry, CPS Estimates
Bank & Credit
Securities, Commodities & Investment
Insurance
Real Estate
1970 1980 1990 2000
Year
55

Ratio
CPS Estimates adjusted for shifts in the employee and occupational composition of the industries
Bank & Credit
Securities, Commodities & Investment
Insurance
Real Estate
1.0 1.5 2.0 2.5 3.0 Figure 8. Predicted Annual Earnings Relative to the Non-finance Economy by Detailed Industry,
1970 1980 1990 2000
Year
56

Table 1. Summary of Institutional Account of Financialization
1970s 1980s 1990s 2000s
Pre-financialization Financialization
Precipitating
Factors
Oil Crisis, low-growth, highinflation
economy, global economic
competition
Actors Problems Solutions Institutional Shifts
State Stagflation and political pressure
from corporate actors
Non-Financial Reaching national market limit, facing
global competition
Financial High inflation threatens bank profits
from traditional banking activity;
Reaching local market limits
Adopt deregulation
policies
Demand economic
deregulation, lower
taxes, and a smaller
state
Demand deregulation
of interest rates, mergers,
cross-state banking;
function limits
Consumers High inflation undermines savings Demand deregulation
of interest rates
Institutional
Investors
Foreign
Capital
Neoclassical
Economists
High inflation, low growth undermines
traditional investment strategy
Japan , later China and others seek to
invest capital surplus
Number and size of
institutional investors
increases
Financialization of state, regulatory capture, dismantling
of Glass-Steagall regulations, neoliberal consen-
sus
Rise of shareholder value conception of firm, focus on
short term financial goals rather than long term capital
investment, rise of finance CEOs, CEO pay tied to
stock market performance, income transfers to finance
sector and top management
Increased sector income, tied to deregulation, unregulated
innovation in financial instruments and crosssector
activity, and increased industry concentration.
Rise of gigantic bank holding companies; increased
political power of sector; increased systemic risk tied
to concentration and scale
Easier to get credit, face predatory lending, high interest
rates, after 2003 collapse of mortgage screening by
banks
Increased investment in speculative financial instruments,
increased expectations for stable or high returns
Investment in U.S. financial instruments increases
Advocate market is self-regulating ; develop “efficient markets hypothesis”
57

Table 2. Estimates (in millions of 2000 US dollars) of Income Transfers
into the Finance Sector during the period of Financialization (after 1998
holding companies are included in the financial sector income estimates ).
1981-2008 2000-2008
Counterfactual 1948-1980 1948-1980 1948-1980 1948-1980
method Average Trend Average Trend
Profits 3,769,808 2,710,983 1,727,048 1,375,425
Compensation 1,333,998 1,817,432 748,112 964,313
Total Rent $5,103,806 $4,528,415 $2,475,160 $2,339,738
Profits/Total 73.9% 59.9% 69.8% 58.8%
58

Appendix A. Industry classification concordance across time and data sources.
We re-categorize the financial industries in Standard Industrial Classification 1972, 1987, North America Industry Classification System, and Census Bureau
1950 industrial Classification using following concordance.
Used Categories Original Categories
SIC 1972 SIC 1987 NAICS 2002 CPS Census Bureau 1950 industrial
classification
FIRE (SIC)
Finance, insurance,
and real estate
Finance, insurance,
and real estate
-- --
FIRE (NAICS)* -- -- Finance and insurance --
-- --
Real estate and rental and
--
leasing
Bank & Credit (SIC) Banking Depository institutions -- --
Credit agencies other Nondepository institu-
than banks
tions
-- --
Bank & Credit (NAICS) -- -- Federal Reserve banks --
-- --
Credit intermediation
related activities
and
--
Bank & Credit (CPS) -- -- -- Banking and credit agencies
Securities, Commodities &
Investment (SIC)
Security and
modity brokers
com- Security and
modity brokers
com-
-- --
Securities, Commodities &
Investment (NAICS)
-- --
Securities, commodity contracts,
and investments
--
Securities, Commodities &
Investment (CPS)
-- -- --
Security and commodity brokerage
and investment companies
Insurance (SIC) Insurance carriers Insurance carriers -- --
Insurance agents, brokers,
and service
Insurance agents, brokers,
and service
-- --
Insurance (NAICS) -- --
Insurance carriers and related
activities
--
Insurance (CPS) -- Insurance
Real Estate (SIC) Real estate Real estate -- --
Real Estate (NAICS) -- -- Real estate --
59

Real Estate (CPS) -- -- -- Real estate
Holding Companies** -- --
Management of companies
and enterprises
--
*For NAICS, the bank holding companies are not included in the FIRE category. Thus, using only this category could underestimate the performance of
the whole financial sector.
**This category includes both financial and nonfinancial hold companies.
60

Appendix B. Sector and industry shifts employee characteristics and occupational structure, CPS 1970-2008
Periods Industry
1970-
1979
Non-Financial
1980-
1989
1990-
1999
2000-
2008
Bank & Credit
Securities, Commoditiesvestment
Insurance
& In-
Real Estate
Non-Financial
Bank & Credit
Securities, Commoditiesvestment
Insurance
& In-
Real Estate
Non-Financial
Bank & Credit
Securities, Commoditiesvestment
Insurance
& In-
Real Estate
Non-Financial
Adjusted
Earnings
(S.D.)
26870.70
(23234.46)
28396.74
(22852.21)
47567.97
(40266.12)
34045.69
(27188.11)
27179.15
(27562.17)
25159.06
(23300.25)
28827.49
(23457.33)
50545.26
(40957.44)
33284.85
(25954.26)
27409.67
(28715.45)
27663.18
(29907.03)
34306.74
(36028.95)
62135.98
(67208.65)
39422.32
(37192.36)
32416.81
(42102.57)
32307.26
(39540.40)
Managers &
Professionals Sales
High School &
Some College College +
24.37% 5.81% 54.07% 15.49%
31.80% 0.85% 75.94% 16.99%
24.03% 32.77% 53.52% 39.59%
19.01% 35.93% 70.31% 23.10%
19.33% 30.84% 58.00% 16.45%
28.08% 5.87% 58.74% 19.57%
34.91% 1.64% 72.32% 24.01%
30.94% 37.97% 46.76% 50.64%
23.96% 36.54% 67.35% 28.63%
26.59% 27.55% 60.69% 23.08%
33.01% 5.48% 60.48% 23.25%
41.02% 3.32% 66.65% 31.00%
39.56% 37.49% 38.00% 60.43%
30.61% 40.96% 62.38% 35.00%
30.87% 25.90% 61.48% 26.11%
35.76% 5.44% 58.56% 27.50%
Age
(S.D)
35.72
(14.47)
34.09
(13.37)
37.19
(14.61)
35.42
(13.48)
41.05
(15.71)
35.17
(13.83)
34.44
(12.53)
35.73
(12.62)
36.15
(12.78)
39.76
(14.90)
36.64
(13.36)
36.18
(11.94)
37.71
(12.33)
38.46
(11.94)
41.47
(14.17)
38.56
(13.85)
Total Yearly
Work Hours
(S.D) White Male
1689.94
84.46% 58.21%
(826.33)
1802.84
(615.36)
88.88% 34.22%
1931.09 (621.25) 93.11% 62.74%
1887.93
(661.83)
1735.75
(893.24)
1669.68
(814.76)
1859.11
(600.10)
2022.85
(667.67)
1903.00
(610.54)
1729.48
(822.03)
1772.56
(806.03)
1945.30
(606.10)
2091.10
(695.46)
1988.37
(585.55)
1850.78
(790.94)
1825.12
(764.83)
90.24% 45.56%
85.51% 57.24%
81.29% 54.33%
83.61% 29.18%
87.50% 56.99%
86.65% 37.64%
83.27% 50.68%
77.05% 53.34%
79.04% 29.72%
84.89% 58.44%
82.88% 35.46%
80.41% 51.26%
72.06% 52.91%
61

Bank & Credit
Securities, Commoditiesvestment
Insurance
& In-
Real Estate
43667.64
(50783.10)
83289.47
(94230.86)
47326.60
(51483.65)
40834.71
(54386.58)
48.26% 5.06% 61.60% 36.09%
58.76% 22.40% 31.26% 67.62%
33.04% 36.53% 56.67% 41.81%
31.30% 31.34% 59.64% 31.46%
38.11
(12.62)
39.60
(12.11)
41.25
(12.20)
43.89
(14.15)
1991.73
(581.74)
2139.38
(645.69)
2021.73
(555.06)
1898.62
(740.49)
73.57% 34.47%
81.16% 59.28%
78.47% 36.21%
76.48% 49.45%
62