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Rising Inequality and the Financial Crises of 1929 and 2008

In: Consequences of Economic Downturn

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  • Jon D. Wisman
  • Barton Baker

Abstract

The financial crisis of 2008 has prompted research into its commonalities with that of 1929 and a search for common causes. Most scholars agree that in both instances low interest rates, financial innovation, and laissez-faire ideology supporting lax regulation played important causal roles. While this analysis is not incorrect, it addresses proximate as opposed to more profound underlying causality. At this deeper level, both crises were in part caused by the consequences of dramatically rising inequality.

Suggested Citation

  • Jon D. Wisman & Barton Baker, 2011. "Rising Inequality and the Financial Crises of 1929 and 2008," Perspectives from Social Economics, in: Martha A. Starr (ed.), Consequences of Economic Downturn, chapter 0, pages 63-82, Palgrave Macmillan.
    • Handle: RePEc:pal:pfschp:978-0-230-11835-5_4
    DOI: 10.1057/9780230118355_4
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    References listed on IDEAS

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    1. Jon Wisman, 2009. "Household Saving, Class Identity, and Conspicuous Consumption," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(1), pages 89-114.
    2. Clarence D. Long, 1960. "Wages and Earnings in the United States, 1860-1890," NBER Books, National Bureau of Economic Research, Inc, number long60-1, March.
    3. Robert Frank, 2000. "Does Growing Inequality Harm the Middle Class?," Eastern Economic Journal, Eastern Economic Association, vol. 26(3), pages 253-264, Summer.
    4. White, Eugene N, 1990. "The Stock Market Boom and Crash of 1929 Revisited," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 67-83, Spring.
    5. Michael Perelman, 2002. "Steal This Idea," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-07929-9.
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    7. Saez, Emmanuel, 2009. "Striking it Richer: The Evolution of Top Incomes in the United States (Update with 2007 estimates)," Institute for Research on Labor and Employment, Working Paper Series qt8dp1f91x, Institute of Industrial Relations, UC Berkeley.
    8. Jon D. Wisman & James F. Smith, 2011. "Legitimating Inequality: Fooling Most of the People All of the Time," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(4), pages 974-1013, October.
    9. Christopher Brown, 2008. "Inequality, Consumer Credit and the Saving Puzzle," Books, Edward Elgar Publishing, number 12877.
    10. Peter Temin, 1991. "Lessons from the Great Depression," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262700441, December.
    11. Peter Temin, 1994. "The Great Depression," NBER Historical Working Papers 0062, National Bureau of Economic Research, Inc.
    12. Leo Grebler & David M. Blank & Louis Winnick, 1956. "Capital Formation in Residential Real Estate: Trends and Prospects," NBER Books, National Bureau of Economic Research, Inc, number greb56-1, March.
    13. Jeffrey G. Williamson & Peter H. Lindert, 1980. "Long-Term Trends in American Wealth Inequality," NBER Chapters, in: Modeling the Distribution and Intergenerational Transmission of Wealth, pages 9-94, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jon Wisman, 2013. "Government Is Whose Problem?," Journal of Economic Issues, Taylor & Francis Journals, vol. 47(4), pages 911-938.
    2. Jon D. Wisman & Aaron Pacitti, 2013. "Ending the Crisis With Guaranteed Employment and Retraining," Working Papers 2013-12, American University, Department of Economics.
    3. Philip Arestis & Aurélie Charles & Giuseppe Fontana, 2013. "Financialization, the Great Recession, and the Stratification of the US Labor Market," Feminist Economics, Taylor & Francis Journals, vol. 19(3), pages 152-180, July.
    4. Jakob Kapeller & Bernhard Schütz, 2015. "Conspicuous Consumption, Inequality and Debt: The Nature of Consumption-driven Profit-led Regimes," Metroeconomica, Wiley Blackwell, vol. 66(1), pages 51-70, February.

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