The US Congress on the Financial and Economic Crisis

The recent financial crisis seems destined to remain an event without causes. Despite the increased attention given over the last decades to the role that credit and finance play in a modern capitalist economy, the outbreak of the crisis was totally unexpected. And in the aftermath, attempts to provide an explanation of events rarely went beyond a simple description of how the financial mess spread. In the light of this state of things, the release of a US government report on the sources of the current economic and financial disorders is an important fact, offering an opportunity to discuss the main lines of interpretation that have emerged a year and a half after the most acute phase of the financial turmoil. This review will first provide a summary of the reconstruction of events by the Financial Crisis Inquiry Commission. The report's explanations of the crisis are then discussed. It is argued that the main limitation of these explanations lies in a conception of the crisis as an entirely monetary and financial event. The following sections discuss some not strictly monetary factors that caused the crisis. We will focus, in particular, on changes in income distribution, arguing that the recognition of the role they played in fostering the crisis establishes the needed connection between the financial crisis proper and the economic crisis in a wider sens