IDEAS home Printed from https://ideas.repec.org/p/usi/wpaper/824.html
   My bibliography  Save this paper

A note on financialization from a Classical-Keynesian standpoint

Author

Listed:
  • Stefano Di Bucchianico

Abstract

In this paper we present a Classical-Keynesian viewpoint on financialization by using Garegnani’s ‘integrated wage-commodity sector’ method. We focus on three aspects. First, we argue that financial instruments such as derivatives have played the role of ‘luxury’ goods, unnecessary and/or detrimental to the direct and indirect production of the wage-basket. Second, we show that the accumulation of household debt can result in a higher normal rate of profit. Third, there is scope to reconsider the connection between financialization and labour market institutions, which makes labour bargaining strength wane. Labour market relationships need not be strictly tied to financialization.

Suggested Citation

  • Stefano Di Bucchianico, 2020. "A note on financialization from a Classical-Keynesian standpoint," Department of Economics University of Siena 824, Department of Economics, University of Siena.
    • Handle: RePEc:usi:wpaper:824
    as

    Download full text from publisher

    File URL: http://repec.deps.unisi.it/quaderni/824.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Atif R. Mian & Ludwig Straub & Amir Sufi, 2020. "The Saving Glut of the Rich," NBER Working Papers 26941, National Bureau of Economic Research, Inc.
    2. Riccardo Pariboni & Pasquale Tridico, 2019. "Labour share decline, financialisation and structural change," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(4), pages 1073-1102.
    3. Thomas Philippon, 2015. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation," American Economic Review, American Economic Association, vol. 105(4), pages 1408-1438, April.
    4. Antonella Stirati, 2018. "On the causes of the changes in income shares: Some reflections in the light the United States experience," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 41(2), pages 260-283, April.
    5. Karsten Kohler & Alexander Guschanski & Engelbert Stockhammer, 2019. "The impact of financialisation on the wage share: a theoretical clarification and empirical test," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(4), pages 937-974.
    6. Carlo Panico & Antonio Pinto, 2018. "Income Inequality and the Financial Industry," Metroeconomica, Wiley Blackwell, vol. 69(1), pages 39-59, February.
    7. Daniele Girardi, 2015. "Financialization of food . Modelling the time-varying relation between agricultural prices and stock market dynamics," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(4), pages 482-505, July.
    8. Brian Nolan & Matteo G. Richiardi & Luis Valenzuela, 2019. "The Drivers Of Income Inequality In Rich Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 33(4), pages 1285-1324, September.
    9. Eckhard Hein & Till Van Treeck, 2010. "Financialisation and Rising Shareholder Power in Kaleckian/Post-Kaleckian Models of Distribution and Growth," Review of Political Economy, Taylor & Francis Journals, vol. 22(2), pages 205-233.
    10. Shaikh, Anwar, 2016. "Capitalism: Competition, Conflict, Crises," OUP Catalogue, Oxford University Press, number 9780199390632, December.
    11. Thibault Darcillon, 2016. "Do Interactions between Finance and Labour Market Institutions Affect the Income Distribution?," LABOUR, CEIS, vol. 30(3), pages 235-257, September.
    12. Girardi, Daniele, 2012. "Do financial investors affect the price of wheat?," MPRA Paper 40285, University Library of Munich, Germany.
    13. Thibault Darcillon, 2016. "Labor-market volatility and financial development in the advanced OECD countries: Does labor market regulation matter?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01248986, HAL.
    14. Cynamon Barry Z. & Fazzari Steven M., 2008. "Household Debt in the Consumer Age: Source of Growth--Risk of Collapse," Capitalism and Society, De Gruyter, vol. 3(2), pages 1-32, October.
    15. Luigi Zingales, 2015. "Does Finance Benefit Society?," NBER Working Papers 20894, National Bureau of Economic Research, Inc.
    16. Carlos Aguiar de Medeiros & Fabian Amico, 2019. "Financialization and Capital Accumulation," Journal of Economic Issues, Taylor & Francis Journals, vol. 53(2), pages 587-594, April.
    17. Pasquale Tridico & Riccardo Pariboni, 2018. "Inequality, financialization, and economic decline," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 41(2), pages 236-259, April.
    18. Jayati Ghosh, 2011. "Implications of regulating commodity derivatives markets in the USA and EU," PSL Quarterly Review, Economia civile, vol. 64(258), pages 287-304.
    19. Marwil J. Dávila-Fernández & Lionello F. Punzo, 2020. "Financialisation as structural change: measuring the financial content of things," Economic Systems Research, Taylor & Francis Journals, vol. 32(1), pages 98-120, January.
    20. Giancarlo Bertocco & Andrea Kalajzic, 2018. "How much does finance benefit society?," PSL Quarterly Review, Economia civile, vol. 71(287), pages 419-437.
    21. Manuel B. Aalbers, 2017. "The Variegated Financialization of Housing," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 41(4), pages 542-554, July.
    22. Daniele Girardi, 2012. "Do financial investors affect the price of wheat?," PSL Quarterly Review, Economia civile, vol. 65(260), pages 79-109.
    23. Engelbert Stockhammer, 2017. "Determinants of the Wage Share: A Panel Analysis of Advanced and Developing Economies," British Journal of Industrial Relations, London School of Economics, vol. 55(1), pages 3-33, March.
    24. Carlo Panico & Antonio Pinto & Martín Puchet Anyul, 2012. "Income distribution and the size of the financial sector: a Sraffian analysis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(6), pages 1455-1477.
    25. Yun Kim, 2013. "Household debt, financialization, and macroeconomic performance in the United States, 1951-2009," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(4), pages 675-694.
    26. Thomas I. Palley, 2010. "The economies of deleveraging: The aftermath of financialization," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 7(2), pages 401-413.
    27. Pasquale Tridico, 2018. "The determinants of income inequality in OECD countries [Political partisanship and welfare state reform in advanced industrial societies]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(4), pages 1009-1042.
    28. Atif Mian & Ludwig Straub & Amir Sufi, 2020. "The Saving Glut of the Rich and the Rise in Household Debt," CESifo Working Paper Series 8201, CESifo.
    29. Carlo Panico, 1985. "Market Forces And The Relation Between The Rates Of Interest And Profits," Contributions to Political Economy, Cambridge Political Economy Society, vol. 4(1), pages 37-60.
    30. Pasquale Tridico, 2012. "Financial crisis and global imbalances: its labour market origins and the aftermath," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(1), pages 17-42.
    31. Thibault Darcillon, 2015. "How does Finance Affect Labor Market Institutions? An Empirical Analysis in 16 OECD Countries," Post-Print hal-01248941, HAL.
    32. Aldo Barba & Massimo Pivetti, 2009. "Rising household debt: Its causes and macroeconomic implications--a long-period analysis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(1), pages 113-137, January.
    33. Malcolm Sawyer, 2013. "What Is Financialization?," International Journal of Political Economy, Taylor & Francis Journals, vol. 42(4), pages 5-18.
    34. Robert H. Scott & Steven Pressman, 2019. "Financially Unstable Households," Journal of Economic Issues, Taylor & Francis Journals, vol. 53(2), pages 523-531, April.
    35. Valentina G. Bruno & Bahattin Büyükşahin & Michel A. Robe, 2017. "The Financialization of Food?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 243-264.
    36. Benjamin M. Hunter & Susan F. Murray, 2019. "Deconstructing the Financialization of Healthcare," Development and Change, International Institute of Social Studies, vol. 50(5), pages 1263-1287, September.
    37. Eckhard Hein, 2015. "Finance-dominated capitalism and re-distribution of income: a Kaleckian perspective," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(3), pages 907-934.
    38. Bowles, Samuel & Gordon, David M & Weisskopf, Thomas E, 1989. "Business Ascendancy and Economic Impasse: A Structural Retrospective on Conservative Economics, 1979-87," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 107-134, Winter.
    39. Costas Lapavitsas & Ivan Mendieta-Muñoz, 2019. "The historic rise of financial profits in the U.S. economy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 42(3), pages 443-468, July.
    40. Stavros Mavroudeas & Alexis Ioannides, 2011. "Duration, Intensity and Productivity of Labour and the Distinction between Absolute and Relative Surplus-value," Review of Political Economy, Taylor & Francis Journals, vol. 23(3), pages 421-437.
    41. Zhang, Yue-Jun & Chevallier, Julien & Guesmi, Khaled, 2017. "“De-financialization” of commodities? Evidence from stock, crude oil and natural gas markets," Energy Economics, Elsevier, vol. 68(C), pages 228-239.
    42. Eckhard Hein, 2019. "Financialisation and tendencies towards stagnation: the role of macroeconomic regime changes in the course of and after the financial and economic crisis 2007–09," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(4), pages 975-999.
    43. Christian Weller & Amanda Logan, 2009. "Measuring Middle Class Economic Security," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(2), pages 327-336.
    44. Luigi Zingales, 2015. "Presidential Address: Does Finance Benefit Society?," Journal of Finance, American Finance Association, vol. 70(4), pages 1327-1363, August.
    45. Brancaccio, Emiliano & Garbellini, Nadia & Giammetti, Raffaele, 2018. "Structural labour market reforms, GDP growth and the functional distribution of income," Structural Change and Economic Dynamics, Elsevier, vol. 44(C), pages 34-45.
    46. Apostolos Fasianos & Diego Guevara & Christos Pierros, 2018. "Have we been here before? Phases of financialization within the twentieth century in the US," Review of Keynesian Economics, Edward Elgar Publishing, vol. 6(1), pages 34-61, January.
    47. Costas Lapavitsas & Ivan Mendieta-Muñoz, 2019. "Profitability trends in the era of financialization: Notes on the U.S. economy," Japanese Economy, Taylor & Francis Journals, vol. 45(1-2), pages 4-19, April.
    48. Michael J McCormack, 2019. "Financial markets and the working class in the USA: an empirical investigation of financial stress," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(4), pages 867-890.
    49. Cédric Durand & Céline Baud, 2012. "Financialization, globalization and the making of profits by leading retailers," Post-Print halshs-00737045, HAL.
    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


    Cited by:

    1. Zolea, Riccardo, 2021. "The relation between interest rate and profit rate: the role of bank profitability in an endogenous money framework," MPRA Paper 108973, University Library of Munich, Germany.
    2. Loretta Mastroeni & Alessandro Mazzoccoli & Greta Quaresima & Pierluigi Vellucci, 2021. "Wavelet analysis and energy-based measures for oil-food price relationship as a footprint of financialisation effect," Papers 2104.11891, arXiv.org, revised Mar 2022.
    3. Stefano Di Bucchianico & Federica Cappelli, 2021. "Exploring the theoretical link between profitability and luxury emissions," Working Papers PKWP2114, Post Keynesian Economics Society (PKES).
    4. Pierluigi Vellucci, 2021. "A critique of financial neoliberalism: a perspective combining multidisciplinary methods and commodity markets," SN Business & Economics, Springer, vol. 1(3), pages 1-11, March.
    5. Zolea, Riccardo, 2022. "A Model of the Relationship between the Interest Rate and the Profit Rate," Centro Sraffa Working Papers CSWP55, Centro di Ricerche e Documentazione "Piero Sraffa".

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Di Bucchianico, Stefano, 2019. "The Impact of Financialization on the Rate of Profit: A Discussion," Centro Sraffa Working Papers CSWP36, Centro di Ricerche e Documentazione "Piero Sraffa".
    2. Walter Paternesi Meloni & Antonella Stirati, 2021. "What has driven the delinking of wages from productivity? A political economy-based investigation for high-income economies," Working Papers PKWP2104, Post Keynesian Economics Society (PKES).
    3. Walter Paternesi Meloni & Antonella Stirati, 2023. "The decoupling between labour compensation and productivity in high‐income countries: Why is the nexus broken?," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 425-463, June.
    4. Hein, Eckhard, 2020. "Financialisation and stagnation: A macroeconomic regime perspective," IPE Working Papers 149/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. Eckhard Hein & Walter Paternesi Meloni & Pasquale Tridico, 2021. "Welfare models and demand-led growth regimes before and after the financial and economic crisis," Review of International Political Economy, Taylor & Francis Journals, vol. 28(5), pages 1196-1223, October.
    6. Cauvel, Michael & Pacitti, Aaron, 2022. "Bargaining power, structural change, and the falling U.S. labor share," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 512-530.
    7. Karsten Kohler & Alexander Guschanski & Engelbert Stockhammer, 2019. "The impact of financialisation on the wage share: a theoretical clarification and empirical test," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(4), pages 937-974.
    8. Hein, Eckhard, 2017. "Financialisation and tendencies towards stagnation: The role of macroeconomic regime changes in the course of and after the financial and economic crisis 2007-9," IPE Working Papers 90/2017, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    9. Hein, Eckhard, 2018. "Inequality and growth: Marxian and post-Keynesian/Kaleckian perspectives on distribution and growth regimes before and after the Great Recession," IPE Working Papers 96/2018, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    10. Pierluigi Vellucci, 2021. "A critique of financial neoliberalism: a perspective combining multidisciplinary methods and commodity markets," SN Business & Economics, Springer, vol. 1(3), pages 1-11, March.
    11. Michel Eduardo Betancourt Gómez, 2023. "Income distribution, banks and managers: A linear joint‐production model with financial assets," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 74-93, February.
    12. Akcay, Ümit & Hein, Eckhard & Jungmann, Benjamin, 2021. "Financialisation and macroeconomic regimes in emerging capitalist economies before and after the Great Recession," IPE Working Papers 158/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    13. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    14. Roberto Veneziani & Luca Zamparelli & Leila E. Davis, 2017. "Financialization And Investment: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1332-1358, December.
    15. Stirati, Antonella & Paternesi Meloni, Walter, 2021. "Unemployment and the wage share: a long-run exploration for major mature economies," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 330-352.
    16. Riccardo Zolea, 2024. "An introduction to the distributional role of bank credit to workers in a surplus approach framework," Working Papers PKWP2403, Post Keynesian Economics Society (PKES).
    17. Gouzoulis, Giorgos & Constantine, Collin, 2020. "The Political Economy of Inequality in Chile and Mexico: Two Tales of Neoliberalism," SocArXiv gruzp, Center for Open Science.
    18. Hein, Eckhard, 2022. "Varieties of demand and growth regimes: Post-Keynesian foundations," IPE Working Papers 196/2022, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    19. Pasquale Tridico & Riccardo Pariboni, 2018. "Inequality, financialization, and economic decline," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 41(2), pages 236-259, April.
    20. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.

    More about this item

    Keywords

    financialization; household debt; labour market; rate of profit; financial markets;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G5 - Financial Economics - - Household Finance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:usi:wpaper:824. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fabrizio Becatti (email available below). General contact details of provider: https://edirc.repec.org/data/desieit.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.