Financialization, Distribution and Accumulation: A Circuit of Capital Model with A Managerial Class

Ramaa Vasudevan

Metroeconomica, 2016, vol. 67, issue 2, 397-428

Abstract: This paper explores some implications of financialization and rising consumer debt on the interplay of inequality and growth in a circuit of capital model, which includes a managerial class. Two possible ‘closures’ are presented in the paper. With the Classical†Marxian closure, credit (specifically consumer credit) endogenously adjusts to the pace of accumulation. With the alternative Keynesian closure, exogenous consumer credit determines the rate of steady†state growth. Two regimes of accumulation are identified on the basis of these two closures. Accumulation is constrained by profitability in the first regime and increasing inequality in the second regime. The paper also investigates the impact of rising managerial income on demand and accumulation. The managerial class plays a dual role in the capitalist economy increasing productivity on one hand and diverting a share of surplus from investment to consumption on the other.

Date: 2016
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