The Great Debt Divergence and its Implications for the Covid-19 Crisis: Mapping Corporate Leverage as Power

The Great Debt Divergence and its Implications for the Covid-19 Crisis: Mapping Corporate Leverage as Power
Baines, Joseph and Hager, Sandy Brian. (2021). New Political Economy. OnlineFirst. January. pp. 1-17. (Article - Journal; English).

Full Text Available As:
Cover Image

Download (83kB) | Preview
PDF (Full Text -- Preprint)

Download (334kB) | Preview

Alternative Locations,,

Abstract or Brief Description

The COVID-19 pandemic has amplified longstanding concerns about mounting levels of corporate debt in the United States. This article places the current conjuncture in its historical context, analysing corporate indebtedness against the backdrop of increasing corporate concentration. Theorising leverage as a form of power, we find that the leverage of large non-financial firms increased in recent decades, while their debt servicing burdens decreased. At the same time, smaller firms experienced sharp deleveraging alongside increasing debt servicing costs. Crucially, smaller corporations also registered severe losses over this period, while large corporations remained profitable, and in fact doubled their net profit margins from the early-1990s to the present. Taken together, the results from our mapping exercise uncover a series of dramatic changes in the financial fortunes of large versus smaller firms in recent decades, a phenomenon we refer to as the great debt divergence. We explain this divergence with reference to the dynamics of power in the era of ‘shareholder capitalism’, and we argue that the US political economy in the post-COVID 19 world is likely to resemble the pre-COVID 19 one, only with more market turmoil, more concentration, more inequality, and even less investment.



Publication Type

Article - Journal

Additional Information



capital as power corporate concentration Covid-19 crisis debt leverage


BN Money & Finance
BN Power
BN Policy
BN Region - North America
BN Agency
BN Business Enterprise
BN Capital & Accumulation
BN Crisis
BN Distribution
BN Industrial Organization

Depositing User

Jonathan Nitzan

Date Deposited

07 Jan 2021 16:39

Last Modified

13 Jan 2021 17:39


Actions (login required)

View Item View Item