The New Capitalist Rich: Corporate Organizational Form and the Political Economy of US Income Inequality

Why, in the United States, are the rich so rich? Some argue that income inequality is driven by the growing salaries of top managers relative to the stagnating wages of mainline workers, and others argue that it is driven by an even more unequal distribution of wealth. Missing from this debate is a striking feature of US inequality: since the mid-1980s, a growing portion of very high incomes have come from pass-through businesses. These hybrid business organizations retain some features of traditional corporations, but their income flows directly to individual owners and shareholders. This article explores the relationship between the hybridization of the capitalist firm and market income inequality in the United States. In putting forward another piece in the larger puzzle of rising income inequality, this article connects the story of income inequality to the political economy of the legal organization of capitalist firms.