Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies

Eckhard Hein

MPRA Paper from University Library of Munich, Germany

Abstract: The severity of the financial and economic crisis which started in 2007 cannot be understood without examining the medium- to long-run developments in the world economy since the early 1980s. The following long-run causes for the crisis can be identified: inefficient regulation of financial markets, increasing inequality in the distribution of income, and rising imbalances at the global (and at the Euro area) level. The focus of the paper is on the changes in distribution triggered by ‘finance-dominated capitalism’ embedded in a ‘neo-liberal’ policy stance since the early 1980s. The three dimensions of re-distribution in the course of ‘financialisation’ and ‘neo-liberalism’ are examined: functional distribution, personal distribution and the development of top incomes. Since the development of functional income distribution is considered to be most important, the channels through which ‘financialisation’ and ‘neo-liberalism’ have contributed to the tendency of the labour income share to fall are identified, the effects of re-distribution on aggregate demand and growth are discussed, and the relationship between re-distribution at the expense of labour and regional (Euro area wide) and global current account imbalances are addressed. Finally, economic policy conclusions with respect to a sustainable income- or wage-led recovery strategy embedded in a ‘Keynesian New Deal at the global and the European level’ are drawn.

Keywords: Distribution; financialisation; global imbalances; financial and economic crisis; economic policy strategies (search for similar items in EconPapers)
JEL-codes: E21 E22 E25 E63 E64 E65 (search for similar items in EconPapers)
Date: 2011-05
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/31180/1/MPRA_paper_31180.pdf original version (application/pdf)

Related works:
Working Paper: Distribution, 'financialisation' and the financial and economic crisis: Implications for post-crisis economic policies (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:31180

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().