Gérard Duménil

Dominique Lévy

This is a work of empirical economics, in which Dumenil and Levy adduce a wide range of evidence to argue that capitalism has entered a phase characterized by rapid technological change, increasing returns to capital, and financial instability. While the authors focus on the interpretation of contemporary capitalism, they also integrate an historical perspective, showing that in the immediate post-World-War II era from 1945 till 1975, now considered a golden age of capitalism in which economic growth was high, inflation low, and income inequality decreasing, returns to capital decreased. In the 1970s this trend reversed, and real interest rates started rising, returns to capital increased, and income inequality widened. This cycle occurred in earlier eras, including one that began in the late nineteenth century and ended in The Great Depression. The authors argue that the similarity between the late nineteenth early 20th century and the past two decades is remarkable. Following the depression of the 1890s, more favorable profitability trends were established as a result of the managerial revolution, in the context of the original assertion of the political and economic hegemony of finance. This course of capitalism culminated in The Great Depression. Will the second hegemony of finance end as the first one did in collapse? The authors do not conclude that a crisis similar to the Great Depression is on the agenda, but a major adjustment will be required. Whether it is a new phase of neoliberalism or a new distinct social order is an open question.

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