Are Full Employment and Social Cohesion Possible Under Financialization?

Georgios Argitis and Stella Michopoulou

Forum for Social Economics, 2011, vol. 40, issue 2, 139-155

Abstract: Unemployment and unequal income distribution were singled out by J.M. Keynes, in the General Theory, as major faults of capitalist economies. This paper argues that there is a negative relationship between financialization and unemployment. In particular, we develop a simple Post Keyneian/Kaleckian model and explore distribution as well as institutional channels through which financialization might have negatively affected the employment performance of capitalist economies, undermining the social cohesion and egalitarian development. Furthermore, we argue that in the face of financialization full employment is likely to be attainable under the institutionalization of an Employer of Last Resort (hereafter ELR) policy strategy.

Date: 2011
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DOI: 10.1007/s12143-010-9078-1

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