This book offers a long overdue and refreshing keynesian approach to the rise of european unemployment. However, the underlying causes vary from country to country. Financialization, the shareholder revolution and the development of a market for corporate control. Corporate financialization is an important and basic branch of economic financialization research, and it is a microscopic manifestation of the economic shift from real to virtual. Stylized facts on the financedominated accumulation regime. However, the empirical literature has substantially ignored the examination of the link between an increasing scale of financialization and the rising. Top incomes under financedriven capitalism, 19902010. Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization and the slowdown of accumulation the past decades have witnessed at the same time a rise in investments in financial assets and a slowdown of accumulation of physical assets. The forms 1 and 2 are consistent with most of the macroanalyses of the financialization process that stress the link between financialization and slow accumulation. Neoliberalism has led to a shift in power relations between capital and labour. Recent evidence also shows that various indicators of the new economy expand inequality in advanced industrial societies.
Its principal impacts are to 1 elevate the significance of the financial sector. Department of banking and financial markets university of. How this impacted on the global accumulation regime turns out to be quite complex. Financialization and the slowdown of accumulation article pdf available in cambridge journal of economics 285. Stockhammer, financialisation and the slowdown of accumulation, cam. Financialization and the slowdown of accumulation core.
Request pdf the financialization of accumulation in 1997, in his last. Financialization has been growing importance in macroeconomic perspectives since the financedominated capitalist relations have captured many of the specific positions in an aggregate economy. Theorizing financialization economic sociology and. Interestingly, less attention is paid to how financial activities moderate the connection between measures of the new. Employing an expanded conceptualization of value added which identifies internal capital, labor and external creditors, government, charities stakeholders with claims on the value generated in production and exchange, we also find that the declining value added produced by financialization was born most strikingly by labor and the state. The impact, however, of the growth in financialization on capital accumulation is more convoluted than expected. He explores the origins and consequences of the dramatic rise of financial markets in the us economy and focuses on the impacts of this process of financialization.
Financialization and the slowdown of accumulation epub wu. These are the first two parts of a fourpart interview with costas lapavitsas focusing on the era of financialization and the transformations at the molecular level of capitalism that are driving changes in economic performance and policy in both highincome and developing countries. The paper develops two discrete measures of financialization and applies these measures to postwar us economic data in order to determine if, and to what extent, the us economy is becoming financialized. Pdf since the early 2000s, scholars from a variety of disciplines have used the. Financialization transforms the functioning of economic systems at both the macro and micro levels. Since the 1990s, it has gradually become a hot topic in academic research. The slowdown of accumulation is rooted in what crotty 2005 has called the. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. The literature on financialization points out the negative impacts of financialization on both the real and financial sides of the economy.
It critically discusses the nairu theory and presents econometric evidence to assess the relative importance of capital investment and labor market. That slowdown has been pronounced and has affected a large number of countries. Financialisation and the slowdown of accumulation econpapers. The weakening growth observed in emes in recent years has surprised many forecasters. Stockhammer, financialisation and the slowdown of accumulation, cambridge journal of economics, 28 5, pp.
Since the 1980s, the slow down in investment and growth has been lower with. Evans, 1967 the capital expenditure was almost entirely explained by expected profitability measured by sales. Network models have become an important topic in modern statistics, and the evolution of network structure over time is an important new area of study. In all likelihood, financialization has increased the size and the fragility of the financial sector. Over the past decades, the financial investment of nonfinancial businesses has been rising, and the accumulation of. Whilst stockhammer has demonstrated the slowdown effect of financialization on accumulation and investment, pikettys illustration of the longrun dynamics of capital relative to national income suggests that without political intervention to effect greater redistribution, inequality may undermine the very basis of democratic legitimacy 2014.
In highlighting the financialization of accumulation, sweezy was therefore pointing to what can be regarded as the enigma of capital in our time. Financialization, globalization and the making of pro. Abstract over the past decades financial investment of nonfinancial. A theoretical and empirical investigation on the u. The process of financialization can roughly be described as an increasing importance of the financial sector which had an impact on the distribution between wages and profits on the one hand, and retained earnings and financial income in the form of. Pdf financialization and the slowdown of accumulation. New directions in modern economics series engelbert stockhammer. In contrast, the early neoclassical approach modelled the firms investment decision as a. Documents in econstor may be saved and copied for your personal and scholarly. A model of financialization of commodities suleyman basak anna pavlova london business school london business school and cepr and cepr june 10, 2015 abstract a sharp increase in the popularity of commodity investing in the past decade has triggered an unprecedentedin. Section 4 presents the research model, data, and results, and section 5 concludes. Financialization and the global economy engelbert stockhammer version 0. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus. Its no secret by now that the recent spike in american inequality, and the gains rapidly accruing to the wealthy, are driven in large part by financialization.
Financialization has increased the size and the fragility of the. With the refer 8 financialisation and the world economy, ed. In the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for usa, uk, france, and germany. Financialization and investment behavior given the increasingly important role that financial markets play in the economy. Over the last generation, financial services have expanded not with economic growth, but with stagnation and crisisand their spectacular rise has accounted for about half of the decline in labors share of. Financialization creates space for the financial sector in economies, and in doing so helps to raise the share of financial assets in the portfolios held by market participants. Financialization, globalization and the making of profits. This paper attempts a firmlevel study of financialisation in the indian context. While nfcs were increasingly involved in investment in financial assets see figure 1, deriving an increasing share of their income from financial sources see figure 2, and. Stockhammer, engelbert 2004 financialization and the slowdown of accumulation cambridge journal of economics 28 5, 71941 3 financialization and the slowdown of accumulation the past decades have witnessed at the same time a rise in investments in financial assets and a slowdown of accumulation of physical assets.
Finally, we explore the relationship between financial ization and weak growth of the economy and stagnating income from labor in financialization and inequality. Largely driven by deregulation, the process works to make financial assets relatively attractive as compared to. Financialization and the slowdown of accumulation by 2000. Accumulation of fixed assets, liquidity, and financialization in the earlier accelerator investment models e. Wolfson oxford university press the chapter will first discuss financialization, i. An emergent literature in sociology reveals a positive association between financialization and income inequality. In contrast, form 3 adds a new dimension of the financialization process that could hardly be captured at the macro level. Palley 2007 notes that the era of financialization has been associated with tepid real economic growth, and. Accumulation, financialisation, and the global slowdown, historical materialism on deepdyve, the largest online rental service for scholarly research with thousands of academic publications available at your fingertips. Financialization and capital accumulation the possibility of a link between financialization and capital accumulation has attracted attention in the literature. The financialization of accumulation request pdf researchgate. Epstein, edward elgar publishers, northampton 2006. Given the shift in power relations between capital and labour, income distribution has shifted sharply in favour of capital.
First we examine the discursive power of international accounting standards in the ongoing process of financialization, which we break into two dynamics centered on profit and control. Financialization and income inequality in the new economy. Accumulation is conceived as real capital formation, which increases overall economic output, as opposed to the appreciation of financial assets, which increases wealth claims but not output. Financialization and the crises of capitalism econstor. The era of financialization an interview with costas lapavitsas. With financialization the motive of finance is no longer to finance trade and. Moreover, accumulation still turns out to be a major determinant in comparative growth studies e. We found full support for our hypothesis in the usa and france, some support in the uk, but none in germany. Financialization, income distribution and the crisis. The first part of the paper offers a novel theory to explain this phenomenon. Over the past decades financial investment of nonfinancial businesses has been rising and accumulation of capital goods has been declining. Does shareholder value orientation or financial market. She also defines financialization as a pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production.