Berkeley Planning Journal

The post-1970s U.S. economy is characterized by stagnant wages and a transition to “financialized” profitability—the growing tendency for financial and non-financial firms to depend on financial profits. The same global and domestic politics that liberated flows of capital also opened credit to a broader consumer base. Credit dependency since the 1970s served the triple function of maintaining profitability by sustaining consumption in the context of unequal wage distributions, generating profit from financial services and new forms of financial classification, and obscuring inequality by creating an illusion of wealth disconnected from wages. After an exploration of the transition to credit-dependant profitability and consumption, I situate the housing bubble and the rise to prominence of the mortgage as a financial instrument in this profitability fix. I focus on the social dynamics that enabled the American home to become the value-carrying asset that justified low-wage credit dependency and temporarily quelled the negative effects of rising inequality.