Inequality, financialization, and political disintegration

Alberto Russo ()
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Alberto Russo: Department of Economics and Social Sciences, Università Politecnica delle Marche, Ancona, Italy and Department of Economics, Universitat Jaume I, Castellón, Spain

No 2025/07, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: Drawing on Peter Turchin’s structural-demographic theory, this paper provides a preliminary examination of how rising inequality and financial liberalization contribute to political instability through the interplay of mass immiseration and elite overproduction. We capture these dynamics through a simplified agent-based macroeconomic model, introducing two structural shocks – growing inequality and financial liberalization – that reflect the transformations reshaping advanced economies in recent decades, a process intertwined with political disintegration. A wealth tax on the richest households can reduce political fragmentation and improve economic performance, but lasting resilience will require embedding such measures within a broader rethinking of the policy paradigm that has prevailed since the 1980s.

Keywords: growing inequality; financial liberalization; political instability; agent-based model (search for similar items in EconPapers)
JEL-codes: C63 D31 E02 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2025/07

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