Distribution and Growth after Keynes

Distribution and Growth after Keynes

A Post-Keynesian Guide

Eckhard Hein

In the first part of the book, Eckhard Hein presents a comprehensive overview of the main approaches towards distribution and growth including the contributions of Harrod and Domar, old and new neoclassical theories including the fundamental capital controversy critique, the post-Keynesian contributions of Kaldor, Pasinetti, Thirlwall and Robinson, and finally the approaches by Kalecki and Steindl. In the second part of the book neo- and post-Kaleckian models are gradually developed, introducing saving from wages, international trade, technological progress, interest and credit. Issues of ‘financialisation’ are also explored and empirical results related to the different models are presented.

Chapter 10: Extending Kaleckian models IV: finance-dominated capitalism

Eckhard Hein

Subjects: economics and finance, history of economic thought, post-keynesian economics


In this chapter we provide a macroeconomic perspective on ‘finance-dominated capitalism’ or ‘financialization’ – the terms are used interchangeably – based on extended versions of the Kaleckian distribution and growth models. Financialization is considered as a long-run trend which has dominated modern capitalism, to different degrees in different countries, starting roughly in the late 1970s or early 1980s in the US and the UK and later in other developed capitalist economies and also in emerging market economies. Epstein (2005a, p. 3) has presented a vague but widely accepted definition, arguing that ‘financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies’. Detailed empirical case studies of the development of financialization have been presented by, for example, the contributions in Epstein (2005b), and by Krippner (2005), Orhangazi (2008a, 2008b) and Palley (2008b, 2013a, chap. 2) for the US, by van Treeck et al. (2007) and van Treeck (2009b) for Germany as compared to the US, and by Stockhammer (2008) for Europe.

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