Financialism leads to Mitchell, and Mitchell to Lim

I noted yesterday the PDF "Financialism: A (Very) Brief History" by Lawrence E. Mitchell. The Abstract at SSRN says

This essay describes various financial, economic, and legal developments in the United States from 1952 until 2007 and argues that they suggest a transformation of the American economic system from capitalism to one I term "financialism."

Mitchell puts the beginning of the process at 1952. This is the earliest date I have ever seen offered for the start of the financialization that turned capitalism into financialism. I happen to think we could go with an earlier date -- but not based on FRED's post-WWII data:

Graph #1: Corporate Finance as a Share of GDP

Clearly, however, financialization did not wait for the Reagan era to begin.

 

Mitchell writes (page 7) that Dr. Michael Lim Mah-Hui

attributes a significant proportion of the rise in what I call financialism to the dramatic increase in American debt between 1960 and 2007.

Lim uses a later start-date than Mitchell, but I don't care because he attributes the problem (or much of it) to excessive debt. He does, and it seems Mitchell does, and so do I -- heart and soul.

In Dr. Lim's paper "From Servant to Master: The Financial Sector and the Financial Crisis" (which Mitchell references) we read:

Between 1960 and 2007, financial sector debt rose an astounding 490 times, while household debt rose 64 times, non-financial corporate debt 53 times and government debt 24 times.

Evidence of imbalance; nuff said.

The irony in those numbers is that government debt -- the one America focuses on exclusively -- shows the smallest increase of them all.

Nuff said.