Global imbalances and modern capitalism: a structural approach to understanding the present economic crisis

Keith Cowling, Stephen Dunn and Philip Tomlinson ()

Journal of Post Keynesian Economics, 2011, vol. 33, issue 4, 575-596

Abstract: The world economy is riven by very large imbalances, with the U.S. economy exhibiting high levels of consumption but low savings ratios and a high current account deficit while China provides the mirror opposite. In this paper, we explore the structural causes of these imbalances that underpin the current global economic crisis. A key focus here is on the corporate sector in the United States, which has been instrumental in creating unsustainable consumptionist tendencies through the use of excessive advertising strategies. In China, changing demographics and market reforms have led to a significant rise in precautionary saving. Correcting the current imbalances requires recognizing the underlying characteristics of both modern and nonmodern capitalist economies, with appropriate responses being structural in nature in addition to any macroeconomic adjustments.

Keywords: advertising; consumption and saving; corporate strategy; global imbalance; modern capitalism (search for similar items in EconPapers)
Date: 2011
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