Chapter 2: Finance-dominated Capitalism and Re-distribution of Income
2. Finance-dominated capitalism and re-distribution of income1 2.1 INTRODUCTION The neo-liberal period since the early 1980s and the emergence of financedominated capitalism in major OECD countries have been associated with a massive re-distribution of income. This is true for functional income distribution which has shifted at the expense of wages as well as for personal distribution of income which has become more unequal over time. This chapter will start with outlining the trends of redistribution since the early 1980s and will make use of different indicators for this. Then, the Kaleckian theory of distribution will be presented and the main channels of influence of neo-liberalism and finance-dominated capitalism on the falling labour income share will be identified within this approach. Finally, some empirical evidence for these channels of influence will be reviewed. 2.2 TRENDS OF RE-DISTRIBUTION SINCE THE EARLY 1980s The trend towards re-distribution under the conditions of financedominated capitalism has several dimensions which will be examined here for the major Euro area countries, Austria, Belgium, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, and Spain; Sweden and the UK as EU countries outside the Euro area; and the US and Japan.2 Data are mainly from European Commission and Organization for Economic Co-operation and Development (OECD) sources. Lack of reliable data is the reason why China had to be excluded from part of the analysis of distribution trends. First, we observe that functional income distribution has changed at the expense of labour and in favour of broad capital income in the...
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