FINANCIALIZATION: A PRIMER BY RAMAA VASUDEVAN November/December 2008 You don't have to be an investor dabbling in the stock market to feel the power of finance. Finance pervades the lives of ordinary people in many ways, from student loans and credit card debt to mortgages and pension plans. And its size and impact are only getting bigger. Consider a few measures: . U.S. credit market debt-all debt of private households, businesses, and government combined-rose from about 1.6 times the nation's gross domestic product in 1973 to over 3.5 times GDP by 2007. The profits of the financial sector represented 14% of total corporate profits in 1981; by 2001-2002 this figure had risen to nearly 50%. These are only a few of the indicators of what many commentators have labeled the "financialization" of the economy-a process University of Massachusetts econ- omist Gerald Epstein succinctly defines as "the increasing importance of financial markets, financial motives, financial institutions, and financial elites in the opera- tion of the economy and its governing institutions." In recent years, this phenomenon has drawn increasing attention. In his latest book, pundit Kevin Phillips writes about the growing divergence between the real (pro- ductive) and financial economies, describing how the explosion of trading in myriad new financial instruments played a role in polarizing the U.S. economy. On the left, po- litical economists Harry Magdoff and Paul M. Sweezy had over many years pointed to the growing role of finance in the operations of capitalism; they viewed the trend as a re- flection of the rising economic and political power of "rentiers"-those whose earnings come from financial activities and from forms of income arising from ownership claims (such as interest, rent, dividends, or capital gains) rather than from actual production