“Money manager capitalism” and Income and Wealth inequality: the US case in the nineties

Abstract

In this paper we will discuss how the fi nancial liberalization that occurred in the seventies and was further accentuated in the nineties, affected the distribution of wealth and income in the U.S. First, we evaluate various theoretical explanations for the rise of inequality as a consequence of the transition from “paternalistic capitalism” to “money manager capitalism”. This discussion examines the main mechanism that operated in the peak of “money manager capitalism” in the nineties: an effective demand stimulus caused by the wealth effect developed as a consequence of the financial asset bubble and a reinforcing economic policy. Finally, we analyze a set of empirical papers and economic data that confi rms a rise of inequality in the U.S. using both functional and personal measures in accordance with the previously discussed theoretical basis.