Finance for Investment? Explaining Macrofinancial Slippage

Dirk Bezemer
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Dirk Bezemer: University of Groningen

No 2025008-GEM, Research Report from University of Groningen, FEB Research Institute (FEBRI)

Abstract: Contemporary capitalism is characterized by ‘macrofinancial slippage’: the growth of assets andliabilities in excess of the growth of activity and saving. This paper presents empirical evidence anddevelops an explanation centered on asset markets. In the Schumpeter-Keynes-Minsky view of theeconomy, money and finance are endogenous, hierarchical, dynamic and hybrid. In the context ofthe post-Keynesian financial-monetary circuit and given financial liberalization, this leads to fourprocesses: an innate tendency for finance to expand; for this expansion to go beyond investmentand spending; growing complexity of the financial sector; and Treasury and central bank policiesthat support capital gains. Combined with insufficient public investment and balance sheet spacefor private profit and investment, this leads to macrofinancial slippage. The paper concludes withpolicy implications and new research questions on capital gains.

Date: 2025
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