This chapter examines the case for wage-led growth from the point of view of Micha_ Kalecki’s theory of wages. The chapter extends Kalecki’s formal consideration of wage increases to that of an open economy. The chapter argues that wage-led growth is a revival of earlier pre-Keynesian under-consumption theories that consider wages solely as income, rather than as a cost of production in capitalism.
Toporowski reviews important monetary theory and policy notions, and discusses monetary policy setting, endogeneity and the structure of financial markets. By examining the main reasons that can lead to monetary policy failure to influence economic decisions, the author strongly advocates those structural connections between financing and monetary policy that make monetary policy endogenous and are exactly the ones that are relied upon in alleviating financial instability.
This chapter presents a critique of the political economy of the financial crisis that broke out in 2008. It argues that the key structural change which preceded the crisis was not financialization, but the transformation of the organizational form of capitalism, from single ownership or partnership capitalism in the first half of the nineteenth century, to the joint stock company. With that came the rise of finance capital with privileged access to the capital market, a new type of corporate finance, and a new kind of financial crisis. Financialization recognizes the growth of financial intermediation, but not the new corporate finance or capital market-based financial crisis. The chapter argues that the crisis that broke out in 2008 was not due to financialization but because large corporations had overborrowed to finance capital market operation (mergers and acquisitions). Unable to refinance those borrowings, corporations reduced their fixed capital investment, reducing cash flow in the economy and precipitating the resulting problems with private and public sector debts.