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Financialization and Income Inequality: A Post Keynesian Institutionalist Analysis

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  • David A. Zalewski
  • Charles J. Whalen
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    Abstract

    One of the most troubling developments in recent years has been widening income inequality in the United States and elsewhere. We argue Post Keynesian Institutionalism (PKI) provides insight into the causes of increasing income inequality and our contribution is threefold. First, we compare PKI to the “financialization” literature, noting key similarities and differences. Second, we examine changes in financial structure and income inequality for a sample of developed nations, showing that financialization has increased in nearly all the countries sampled and that this increase has generally been accompanied by a rise in income inequality. Third, we demonstrate that the development of modern financial structures does not preclude an expansive welfare state and egalitarian public policies. Our finding is congruent with Hyman Minsky's conception of PKI, which stressed both that “economic systems are not natural systems” and that capitalism comes in as many varieties as Heinz has of pickles.

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    Bibliographic Info

    Article provided by M.E. Sharpe, Inc. in its journal Journal of Economic Issues.

    Volume (Year): 44 (2010)
    Issue (Month): 3 (September)
    Pages: 757-777

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    Handle: RePEc:mes:jeciss:v:44:y:2010:i:3:p:757-777

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    Web page: http://www.mesharpe.com/mall/results1.asp?acr=jei

    Related research

    Keywords: financialization; Hyman Minsky; inequality; post Keynesian institutionalism;

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    Cited by:
    1. Herr, Hansjörg, 2013. "An analytical framework for the Post-Keynesian macroeconomic paradigm," IPE Working Papers 23/2013, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Eckhard Hein, 2013. "Finance-dominated Capitalism and Redistribution of Income: A Kaleckian Perspective," Economics Working Paper Archive wp_746, Levy Economics Institute.

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