Rent and financial accumulation: locating the profitability of American finance

Albina Gibadullina

New Political Economy, 2023, vol. 28, issue 2, 259-283

Abstract: American finance has grown immensely profitable in the past four decades, but the precise reasons for this tremendous and sustained growth have not been sufficiently understood. The primary purpose of this paper is to explain the immense profitability of US finance by systematically examining how its sources of profit and types of profit-generating activities have changed since the onset of financialisation in the 1980s. Conceptually, the paper develops a typology of financial profit-generating activities, drawing a separation between credit intermediation, market mediation, and rentierism. Empirically, it examines the changing accumulation dynamics witnessed in US finance since the 1960s using the IRS Statistics of Income, BEA National Income and Product Accounts, and Federal Reserve Flow of Funds data. The paper identifies primary income sources for the sector as a whole and its most profitable subsectors, finding strong evidence that financial profit-making has shifted from lending to ownership and management of capital. It is argued that this transformation has fundamentally changed finance’s relationship with the real economy.

Date: 2023
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DOI: 10.1080/13563467.2022.2095994

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