Advanced Search
MyIDEAS: Login to save this paper or follow this series

Finance-dominated capitalism in crisis: The case for a Global Keynesian New Deal

Contents:

Author Info

  • Hein, Eckhard
  • Truger, Achim

Abstract

We analyse the long-run imbalances of finance-dominated capitalism underlying the present crisis - which began in 2007 - with a focus on developments in the US and Germany. We argue that beyond inefficient regulation of the financial sector, the severeness of the present crisis has been mainly caused by increasing inequalities of income distribution and rising imbalances in the world economy associated with finance-dominated capitalism. From this it follows that in the near and not so near future, the US will no longer be able to act as the driving force for world demand. In order to avoid a period of deflationary stagnation in major parts of the world economy, we finally propose the policy package of a Global Keynesian New Deal which should consist of: 1. re-regulation of the financial sector, 2. re-orientation of macroeconomic policies along (Post-)Keynesian lines, and 3. re-construction of international macroeconomic policy coordination, in particular on the European level, and a new world financial order. --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/59311/1/718083679.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Berlin School of Economics and Law, Institute for International Political Economy (IPE) in its series IPE Working Papers with number 06/2010.

as in new window
Length:
Date of creation: 2010
Date of revision:
Handle: RePEc:zbw:ipewps:062010

Contact details of provider:
Web page: http://www.ipe-berlin.org/
More information through EDIRC

Related research

Keywords: Finance-dominated capitalism; financial crisis; macroeconomic policies; Global Keynesian New Deal;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jan Kregel, 2009. "Some Simple Observations on the Reform of the International Monetary System," Economics Policy Note Archive, Levy Economics Institute 09-8, Levy Economics Institute.
  2. Eckhard Hein & Achim Truger, 2005. "What ever happened to Germany? Is the decline of the former European key currency country caused by structural sclerosis or by macroeconomic mismanagement?," Macroeconomics, EconWPA 0501007, EconWPA.
  3. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, American Economic Association, vol. 96(2), pages 200-205, May.
  4. Eckhard Hein & Engelbert Stockhammer, 2007. "A Post-Keynesian macroeconomic policy mix as an alternative to the New Consensus approach," IMK Working Paper 10-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  5. Petra Dünhaupt & Eckhard Hein & Till van Treeck, 2007. "Finanzsystem und wirtschaftliche Entwicklung: Tendenzen in den USA und in Deutschland aus makroökonomischer Perspektive," IMK Studies 05-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  6. Till van Treeck, 2007. "Reconsidering the Investment-Profit Nexus in Finance-Led Economies: an ARDL-Based Approach," IMK Working Paper 01-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  7. Robert Guttmann, 2009. "Asset Bubbles, Debt Deflation, and Global Imbalances," International Journal of Political Economy, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 38(2), pages 46-69, July.
  8. Eckhard Hein & Achim Truger, 2006. "Monetary policy, macroeconomic policy mix and economic performance in the Euro area," IMK Working Paper 06-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  9. Thomas I. Palley, 2007. "Financialization: What It Is and Why It Matters," Economics Working Paper Archive wp_525, Levy Economics Institute.
  10. Eckhard Hein & Achim Truger, 2006. "Fiscal Policy and Macroeconomic Performance in the Euro area - Lessons for the Future," IMK Working Paper 07-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  11. Eckhard Hein & Achim Truger, 2006. "Germany's post-2000 stagnation in the European context - a lesson in macroeconomic mismanagement," IMK Working Paper 03-2006, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  12. Michael Holz, 2007. "Asset-Based Reserve Requirements: A New Monetary Policy Instrument for Targeting Diverging Real Estate Prices in the Euro Area," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 4(2), pages 331-351.
  13. Wynne Godley & Dimitri B. Papadimitriou & Gennaro Zezza, 2008. "Prospects for the U.S. and the World -- A Crisis That Conventional Remedies Cannot Resolve," Economics Strategic Analysis Archive, Levy Economics Institute sa_dec_08, Levy Economics Institute.
  14. Soon Ryoo & Peter Skott, 2008. "Financialization in Kaleckian Economies with and without Labor Constraints," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 5(2), pages 357-386.
  15. Amit Bhaduri & Kazimierz Laski & Martin Riese, 2006. "A Model Of Interaction Between The Virtual And The Real Economy," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 412-427, 07.
  16. Eckhard Hein, 2002. "Monetary policy and wage bargaining in the EMU: restrictive ECB policies, high unemployment, nominal wage restraint and inflation above the target," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 55(222), pages 299-337.
  17. Eckhard Hein & Achim Truger, 2004. "Macroeconomic co-ordination as an economic policy concept – opportunities and obstacles in the EMU," Macroeconomics, EconWPA 0412007, EconWPA.
  18. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 1-39, February.
  19. Amitava Krishna Dutt, 2006. "Maturity, Stagnation And Consumer Debt: A Steindlian Approach," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 339-364, 07.
  20. Marc Lavoie, 2008. "Financialisation Issues in a Post-Keynesian Stock-flow Consistent Model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 5(2), pages 331-356.
  21. Engelbert Stockhammer, 2007. "Some Stylized Facts on the Finance-Dominated Accumulation Regime," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp142, Political Economy Research Institute, University of Massachusetts at Amherst.
  22. Thomas Palley, 2004. "Asset-based reserve requirements: reasserting domestic monetary control in an era of financial innovation and instability," Review of Political Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 16(1), pages 43-58.
  23. Thomas Palley, 2003. "Asset Price Bubbles and the Case for Asset-Based Reserve Requirements," Challenge, M.E. Sharpe, Inc., vol. 46(3), pages 53-72, May.
  24. Peter Skott & Soon Ryoo, 2008. "Macroeconomic implications of financialisation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(6), pages 827-862, November.
  25. James R. Crotty, 1990. "Owner-Manager Conflict and Financial Theories of Investment Instability: A Critical Assessment of Keynes, Tobin, and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 12(4), pages 519-542, July.
  26. Jan Kregel, 2009. "Why don't the bailouts work? Design of a new financial system versus a return to normalcy," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 33(4), pages 653-663, July.
  27. Eckhard Hein & Engelbert Stockhammer, 2010. "Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model," Review of Political Economy, Taylor & Francis Journals, Taylor & Francis Journals, vol. 22(3), pages 317-354.
  28. Eckhard Hein, 2010. "Shareholder Value Orientation, Distribution And Growth-Short- And Medium-Run Effects In A Kaleckian Model," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 61(2), pages 302-332, 05.
  29. Dorothy Power & Gerald Epstein, 2003. "Rentier Incomes and Financial Crises: An Empirical Examination of Trends and Cycles in Some OECD Countries," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp57, Political Economy Research Institute, University of Massachusetts at Amherst.
  30. Palley, Thomas I., 2009. "America's exhausted paradigm: Macroeconomic causes of the financial crisis and great recession," IPE Working Papers 02/2009, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  31. Thomas Palley, 2011. "America’s flawed paradigm: macroeconomic causes of the financial crisis and great recession," Empirica, Springer, Springer, vol. 38(1), pages 3-17, February.
  32. Eckhard Hein, 2009. "A (Post-) Keynesian perspective on "financialisation"," IMK Studies 01-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  33. Robert Wade, 2009. "From global imbalances to global reorganisations," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 33(4), pages 539-562, July.
  34. Till van Treeck, 2008. "The political economy debate on ‘financialisation’ – a macroeconomic perspective," IMK Working Paper 01-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  35. Till van Treeck, 2009. "A synthetic, stock--flow consistent macroeconomic model of 'financialisation'," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 33(3), pages 467-493, May.
  36. Hein, Eckhard, 2002. "Monetary policy and wage bargaining in the EMU: Restrictive ECB policies, high unemployment, nominal wage restraint and rising inflation," WSI Discussion Papers 103, Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.
  37. Eckhard Hein & Achim Truger, 2009. "How to Fight (or Not to Fight) a Slowdown," Challenge, M.E. Sharpe, Inc., vol. 52(3), pages 52-75, May.
  38. Engelbert Stockhammer, 2004. "Financialisation and the slowdown of accumulation," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 28(5), pages 719-741, September.
  39. Thomas I. Palley, 2010. "Asset price bubbles and counter-cyclical monetary policy: Why central banks have been wrong and what should be done," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 7(1), pages 91-107.
  40. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
  41. Eckhard Hein & Torsten Niechoj, 2005. "Guidelines for sustained growth in the EU? The concept and consequences of the Broad Economic Policy Guidelines," Macroeconomics, EconWPA 0508016, EconWPA.
  42. Engelbert Stockhammer, 2006. "Shareholder value orientation and the investment-profit puzzle," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 28(2), pages 193-215, January.
  43. Louis-Philippe Rochon & Mark Setterfield, 2007. "Interest rates, income distribution, and monetary policy dominance: Post Keynesians and the "fair rate" of interest," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 30(1), pages 13-42, October.
  44. Dimitri B. Papadimitriou, 2009. "Global imbalances: Strategic prospects for the US and the world," European Journal of Economics and Economic Policies: Intervention, Edward Elgar, vol. 6(1), pages 53-60.
  45. Thomas I. Palley, 1994. "Debt, Aggregate Demand, and the Business Cycle: An Analysis in the Spirit of Kaldor and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 16(3), pages 371-390, April.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
  2. Thomas Goda, 2013. "Changes in income inequality from a global perspective: an overview," Working Papers, Post Keynesian Economics Study Group (PKSG) PKWP1303, Post Keynesian Economics Study Group (PKSG).
  3. Hein, Eckhard, 2011. "Finance-dominated capitalism, re-distribution, household debt and financial fragility in a Kaleckian distribution and growth model," MPRA Paper 34115, University Library of Munich, Germany.
  4. Eckhard Hein & Nina Dodig, 2014. "Financialisation, distribution, growth and crises – long-run tendencies," Working papers, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project wpaper23, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
  5. Jakob Kapeller & Bernhard Schütz, 2012. "Conspicuous consumption, inequality and debt: The nature of consumption-driven profit-led regimes," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2012-13, Department of Economics, Johannes Kepler University Linz, Austria.
  6. Engelbert Stockhammer & Özlem Onaran, 2012. "Wage-led Growth: Theory, Evidence, Policy," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp300, Political Economy Research Institute, University of Massachusetts at Amherst.
  7. Hein, Eckhard, 2012. "Finance-dominated capitalism, re-distribution and the financial and economic crises - a European perspective," MPRA Paper 35903, University Library of Munich, Germany.
  8. Jesús Ferreiro & Carmen Gómez & Felipe Serrano, 2013. "Mistakes in the Fiscal Policy in Spain before the Crisis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(5), pages 577-592, September.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:ipewps:062010. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.