Finance-dominated capitalism, re-distribution and the financial and economic crises - a European perspective

Eckhard Hein

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper the euro crisis is viewed as the most recent episode of the crisis of finance-dominated capitalism. Therefore, two major features of finance-dominated capitalism, the increasing inequality of income distribution and the rising imbalances of current accounts, are analysed for a set of major Euro area countries. Against this background the euro crisis is examined, and it is shown that the economic policy reactions of European governments and institutions, narrowly interpreting the crisis as a sovereign debt crisis caused by irresponsible behaviour of some member country governments, are misguided and will lead to deflationary stagnation and an increasing risk of disintegration of the Euro area. For this reason, finally an alternative macroeconomic policy approach tackling the basic contradictions of finance-dominated capitalism and the deficiencies of European economic policy institutions and economic policy strategies is outlined. It is argued that, on the one hand, an institution which convincingly guarantees public debt of Euro area member countries and, on the other hand, an expansionary macroeconomic policy approach, in particular in the current account surplus countries of the Euro area, need to be introduced.

Keywords: Finance-dominated capitalism; distribution; financial and economic crisis; European economic policies (search for similar items in EconPapers)
JEL-codes: E25 E58 E61 E63 E64 E65 (search for similar items in EconPapers)
Date: 2012-01-12
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Finance-dominated capitalism, re-distribution and the financial and economic crises: A European perspective (2012)
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