Finance-dominated capitalism and re-distribution of income: a Kaleckian perspective

Eckhard Hein

Cambridge Journal of Economics, 2015, vol. 39, issue 3, 907-934

Abstract: In this article a major channel through which financialisation or finance-dominated capitalism affects macroeconomic performance is examined: the distribution channel. Empirical data for the following dimensions of (re-)distribution in the period of finance-dominated capitalism since the early 1980s is provided for 15 advanced capitalist economies: functional distribution, personal/household distribution and the share and the composition of top incomes. Based on the Kaleckian approach to the determination of income shares, the effects of financialisation on functional income distribution are studied in more detail. Some stylised facts of financialisation are integrated into the Kaleckian approach, and by means of reviewing empirical and econometric literature it is found that financialisation and neoliberalism have contributed to the falling labour income share since the early 1980s through three main Kaleckian channels: 1) a shift in the sectoral composition of the economy, 2) an increase in management salaries and rising profit claims of the rentiers and thus in overheads, and 3) weakened trade union bargaining power.

Date: 2015
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Working Paper: Finance-dominated Capitalism and Redistribution of Income: A Kaleckian Perspective (2013)
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