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Financialisation and Distribution Before and After the Crisis: Patterns for Six OECD Countries

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Economic Policies since the Global Financial Crisis

Part of the book series: International Papers in Political Economy ((IPPE))

Abstract

In this contribution, we analyse the effects of financialisation on income distribution, before and after the Great Financial Crisis and the Great Recession. The analysis is based on a Kaleckian theory of income distribution adapted to the conditions of financialisation. Financialisation may affect aggregate wage or gross profit shares of the economy as a whole through three channels: first, the sectoral composition of the economy; second, the financial overhead costs and profit claims of the rentiers; and, third, the bargaining power of workers and trade unions. We examine empirical indicators for each of these channels for six OECD (Organisation for Economic Co-operation and Development) economies, both before and after the crisis. We find that these countries have shown broad similarities regarding redistribution before the crisis, however, with differences in the underlying determinants. These differences have carried through to the period after the crisis and have led to different results regarding the development of distribution since then.

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Notes

  1. 1.

    The adjusted wage share , or the labour income share, thus includes labour incomes of both dependent and self-employed workers, and GDP excludes taxes but includes subsidies.

  2. 2.

    The data apply to income before taxes and is provided by the World Wealth and Income Database. For more information on the dataset and its limitations, see Piketty and Saez (2003).

  3. 3.

    According to Atkinson (2009), the development of functional income distribution is fundamental for the other dimensions of distribution as well as for the macroeconomic effects of distributional changes.

  4. 4.

    However, Kalecki (1954, p. 18) adds: ‘The degree of monopoly may, but need not necessarily, increase as a result of a rise in overheads relative to prime costs’.

  5. 5.

    See, in particular, the recent panel econometric studies on the determinants of functional income distribution , including data for large sets of countries or industries by Dünhaupt (2017), Godechot (2016), Kristal (2010), Stockhammer (2009, 2013a, b, 2015b) and Tomaskovic-Devey and Lin (2013).

  6. 6.

    For a broader assessment of financialisation and the financial and economic crisis in the USA , e.g. see Evans (2016).

  7. 7.

    For a broader assessment of financialisation and the financial and economic crisis in the UK , see Lepper et al. (2016), for example.

  8. 8.

    For a broader assessment of financialisation and the financial and economic crisis in Spain , see Ferreiro et al. (2016), for example.

  9. 9.

    To support this claim, we would need data on sectoral labour income shares, which include the labour income of the self-employed.

  10. 10.

    For austerity policies in Spain , see Febrero and Bermejo (2013) and Ferreiro and Gomez (2015).

  11. 11.

    This section draws on and updates what has been presented in Hein and Detzer (2015).

  12. 12.

    For a broader assessment of financialisation and the financial and economic crisis in Germany , see Detzer and Hein (2016), for example.

  13. 13.

    Bibow (2005), Hein and Truger (2005, 2009), and Herr and Kazandziska (2011) have presented extensive analyses of the restrictive macroeconomic policies that dominated the German economy since the mid-1990s, and during the trade cycle of the early-2000s until the Great Recession , in particular.

  14. 14.

    For a broader assessment of financialisation and the financial and economic crisis in Sweden , see Stenfors (2016), for example.

  15. 15.

    For a broader assessment of financialisation and the financial and economic crisis in France , see Cournilleau and Creel (2016), for example.

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Acknowledgement

We would like to thank Philip Arestis for helpful comments. Remaining errors are ours, of course.

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Authors and Affiliations

  1. Berlin School of Economics and Law, Badensche Str. 52, 10825, Berlin, Germany

    Eckhard Hein, Petra Dünhaupt, Ayoze Alfageme & Marta Kulesza

  2. University of Paris 13, Villetaneuse, France

    Marta Kulesza

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  1. Eckhard Hein
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  2. Petra Dünhaupt
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  3. Ayoze Alfageme
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Editors and Affiliations

  1. University of Cambridge, Cambridge, United Kingdom

    Philip Arestis

  2. University of Leeds, Leeds, United Kingdom

    Malcolm Sawyer

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Hein, E., Dünhaupt, P., Alfageme, A., Kulesza, M. (2017). Financialisation and Distribution Before and After the Crisis: Patterns for Six OECD Countries. In: Arestis, P., Sawyer, M. (eds) Economic Policies since the Global Financial Crisis. International Papers in Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-60459-6_4

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  • DOI: https://doi.org/10.1007/978-3-319-60459-6_4

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