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