Financialisation and tendencies towards stagnation: the role of macroeconomic regime changes in the course of and after the financial and economic crisis 2007–09

Abstract

This paper argues that the re-emergence of stagnation tendencies in modern capitalism can be related to financialisation and its macroeconomic failures leading to the recent crises, and in particular to the macroeconomic responses towards the crisis and the respective regime shifts in mature capitalist economies. The focus of the paper is on the latter, and it examines the regime changes for six mature capitalist economies, the two liberal Anglo-Saxon economies of the USA and the UK, a representative country from the Nordic welfare states, Sweden, the three important Eurozone countries France, Germany and Spain, as well as the core Eurozone (EA-12) as a whole. The concept of macroeconomic regimes under the conditions of financialisation is recapitulated, applied to the period before the crisis, and finally the regime changes during and after the crisis are examined. It is shown that a dominant tendency towards export-led mercantilism, in particular in the Eurozone and its main member countries, imposes an aggregation problem on the global economy and thus contributes to stagnation and rising global macroeconomic risks. Finally, short- and long-run alternative policies to deal with these problems are suggested.

Welfare models and demand-led growth regimes before and after the financial and economic crisis

“…These 'preference' and 'internal means of finance' channels should each have partially negative effects on firms' real investment in the capital stock. Econometric evidence for these two channels has been supplied by Davis (2018), Onaran et al (2011), Orhangazi (2008), Stockhammer (2004), Tori and Onaran (2017a;2017b;, and van Treeck (2008), confirming a depressing effect of increasing shareholder value orientation on investment in capital stock, in particular for the US but also for other economies, like the UK, France and other Western European and some emerging market and developing economies.…”

“…Reviewing the empirical literature on the determinants of functional income distribution against the background of the Kaleckian theory of income distribution, it is argued that features of finance-dominated capitalism have contributed to the falling labour income share since the early 1980s through three main channels: the falling bargaining power of trade unions, rising profit claims imposed in particular by increasingly powerful rentiers, and a change in the sectoral composition of the economy in favour of the financial corporate sector and at the expense of the non-financial corporate sector or the public sector with higher labour income shares. In Hein et al (2017a;2017b; the relative importance of these factors has been analysed for six countries: France, Germany, Spain, Sweden, the UK, and the US.…”

Labour market flexibilization and income distribution in Europe

“…68, Issue 2 (Special Issue), pp. 167-185 for a model of growth based on a decline of labour income and the consequent rise in capital income (Eckhard Hein 2019).…”

The Eurozone in Crisis — A Kaleckian Macroeconomic Regime and Policy Perspective

“…In what follows, we will cluster the demand and growth regimes of the initial Eurozone member countries, without Luxembourg, and the EA-12 as a whole, following a procedure introduced and applied by Dodig et al (2016), Hein (2012Hein ( , chapter 8, 2013Hein ( /2014Hein ( , 2019 and . First, we will look at the growth contributions of the main demand aggregates, private and public consumption, investment and net exports, which should sum up to real GDP growth.…”

“…See alsoHein (2019),Hein and Mundt (2012),Stockhammer (2010Stockhammer ( , 2012Stockhammer ( , 2015, vanTreeck and Sturn (2012), the contributions inHein et al (2015Hein et al ( , 2016, and several others. These macroeconomic features of financialisation have been derived from the broad and extensive literature on changes in the structure, institutions and power relationships in modern capitalism since the early 1980s.…”