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Financialization and Income Inequality: A Post Keynesian Institutionalist Analysis


  • David Zalewski
  • Charles Whalen


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.

Suggested Citation

  • David Zalewski & Charles Whalen, 2010. "Financialization and Income Inequality: A Post Keynesian Institutionalist Analysis," Journal of Economic Issues, Taylor & Francis Journals, vol. 44(3), pages 757-777.
  • Handle: RePEc:mes:jeciss:v:44:y:2010:i:3:p:757-777 DOI: 10.2753/JEI0021-3624440309

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    References listed on IDEAS

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    Cited by:

    1. Charles J. Whalen, 2012. "Money manager capitalism," Chapters,in: Handbook of Critical Issues in Finance, chapter 34, pages i-ii Edward Elgar Publishing.
    2. Yan Liang, 2011. "Money-manager capitalism, capital flows and development in emerging market economies: a Post-Keynesian Institutionalist analysis," Chapters,in: Financial Instability and Economic Security after the Great Recession, chapter 9, pages 179-201 Edward Elgar Publishing.
    3. Eckhard Hein, 2015. "Finance-dominated capitalism and re-distribution of income: a Kaleckian perspective," Cambridge Journal of Economics, Oxford University Press, vol. 39(3), pages 907-934.
    4. John Marangos & Charles J. Whalen, 2011. "Evolution without fundamental change: the Washington Consensus on economic development," Chapters,in: Financial Instability and Economic Security after the Great Recession, chapter 8, pages 153-178 Edward Elgar Publishing.
    5. 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).
    6. Fadhel Kaboub, 2011. "Understanding and preventing financial instability; Post-Keynesian Institutionalism and government employer of last resort," Chapters,in: Financial Instability and Economic Security after the Great Recession, chapter 4, pages 77-92 Edward Elgar Publishing.

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