GOSHEN, Conn. — America is at a turning point. Corporate scandals, the fall of the stock markets, the sudden mobilizations in Washington of the last few weeks to legislate against some of the more egregious corporate abuses: they all indicate that the nation's attitude toward business is changing. It is potentially a bigger change than many politicians realize. What's unnerving them is that the payback from the market bubble of the late 1990's is becoming apparent to Main Street. The charts of the downside since March 2000 are starting to match the slope of the earlier three-year upside.

Not that it's a new phenomenon. In the Gilded Age of the late 19th century and again in the Roaring Twenties, wealth momentum surged, the rich pulled away from everyone else and financial and technological innovation built a boom. Then it went partially or largely bust in the securities markets. Digging out is never easy. But this time, the deep-rooted nature of "financialization" in the United States that developed in the 1980's and 90's may make it even tougher.

Near the peak of the great booms, old economic cautions are dismissed, financial and managerial operators sidestep increasingly inadequate regulations and ethics surrender to greed. Then, after the collapse, the dirty linen falls out of the closet. Public muttering usually swells into a powerful chorus for reform — deep, systemic changes designed to catch up with a whole new range and capacity for frauds and finagles and bring them under regulatory control.

Even so, correction is difficult, in part because the big wealth momentum booms leave behind a triple corruption: financial, political and philosophic. Besides the swindles and frauds that crest with the great speculative booms, historians have noted a parallel tendency: cash moving into politics also rises with market fevers.

During the Gilded Age, the railroad barons bought legislatures and business leaders bought seats in the United States Senate. In the last years of the 19th century, one senator naïvely proposed a bill to unseat those senators whose offices were found to have been purchased. This prompted a colleague to reply, in all seriousness, "We might lose a quorum here, waiting for the courts to act."

Over the last two decades, the cost of winning a seat in Congress has more than quadrupled. Legislators casting votes on business or financial regulation cannot forget the richest 1 percent of Americans, who make 40 percent of the individual federal campaign donations over $200. Money is buying policy.

Speculative markets and growing wealth momentum also corrupt philosophy and ideology, reshaping them toward familiar justifications of greed and ruthlessness. The 1980's and 1990's have imitated the Gilded Age in intellectual excesses of market worship, laissez-faire and social Darwinism. Notions of commonwealth, civic purpose and fairness have been crowded out of the public debate.

Part of the new clout and behavior of finance is so deep-rooted, however, that it raises questions that go far beyond the excesses of the bubble. In the last few decades, the United States economy has been transformed through what I call financialization. The processes of money movement, securities management, corporate reorganization, securitization of assets, derivatives trading and other forms of financial packaging are steadily replacing the act of making, growing and transporting things.

That transformation has many roots. Finance surged in the 80's partly because deregulation removed old ceilings on interest rates and let financial institutions offer new services. The rising stock market, in turn, drew money from savings accounts into money market funds and mutual funds, turning the securities industry into a huge profit center. Computers underpinned the expansion of everything from A.T.M.'s to scores of new derivative instruments by which traders could gamble with such dice as Treasury note futures or Eurodollar swaps. Meanwhile, the Federal Reserve and Treasury Department proved during the 80's and 90's that nothing too bad could happen in the financial sector, because Washington was always ready with a bailout.

Supported so openly, rescued from the stupid decisions and market forces that pulled down other industries, the finance, insurance and real estate sector of the economy overtook manufacturing, pulling ahead in the G.D.P. and national income charts in 1995. By 2000, this sector also moved out front in profits. It also became the biggest federal elections donor and the biggest spender on Washington lobbying.

The effects have been profoundly inegalitarian — and not just in the loss of manufacturing's blue-collar middle class. In the last two decades, as money shifted from savings accounts into mutual funds, promoting the stock markets and the money culture, corporate executives became preoccupied with stock options, compensation packages and golden parachutes. "More" became the byword.

In the new management handbook as rewritten by finance, the concerns of employees, shareholders and even communities could be jettisoned to raise stock prices. Major companies could make (or fake) larger profits by financial devices: writing futures contracts, investing in stocks, juggling pension funds, moving low-return assets into separate partnerships and substituting stock options for salary expenses. Enron was only the well-publicized tip of a large iceberg.

A century ago, putting a new regulatory framework around abuses of the emergent railroad and industrial sectors became a priority. This effort largely succeeded. Whether another such framework must be put in place around finance in order to safeguard household economic security is a question that at the very least calls for a national debate. Whether the current proposals are the beginnings of that debate or mere window dressing remains to be seen.

Kevin Phillips is the author of "Wealth and Democracy: A Political History of the American Rich."

Copyright 2002 The New York Times Company

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