EconPapers    
Economics at your fingertips  
 

Financialization, Household Credit and Economic Slowdown in the U.S

Deepankar Basu

Discussion Papers from Research on Money and Finance

Abstract: Three important features of the U.S. economy during the neoliberal era since the mid-1970shave been: (a) growing financialization, (b) increasing household debt, and (c) stagnant real wages for production and nonsupervisory workers. This paper develops a discrete-time Marxian circuit of capital model to analyze the links between these three features and economic slowdown. The discrete-time model is used to address two important theoretical issues of general interest to the heterodox economic tradition: profit-led versus wage-led growth, and the growth-reducing impact of non-production credit. First, it is demonstrated that both profitled and wage-led growth regimes can be accommodated within the Marxian circuit of capital model. Second, it is demonstrated that the steady-state growth rate of a capitalist economy is negatively related to the share of consumption credit in total net credit, when the total credit is large to begin with. Bringing these two results together, the paper demonstrates that the three characteristics of the U.S economy under neoliberalism can have a growth-reducing impact on a capitalist economy. Hence, this paper o ers a novel explanation, rooted in Marx’s analysis of the circuits of capital, of the slowdown of the U.S. economy during the neoliberal period.

New Economics Papers: this item is included in nep-fdg, nep-hme and nep-pke
References: Add references at CitEc
Citations:

Downloads: (external link)
http://researchonmoneyandfinance.org/media/papers/RMF-30-Basu.pdf

Related works:
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:rmf:dpaper:30

Access Statistics for this paper

More papers in Discussion Papers from Research on Money and Finance
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).

 
Page updated 2024-05-20
Handle: RePEc:rmf:dpaper:30