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Financialization and the Slowdown of Accumulation

Author

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  • Engelbert Stockhammer

    (Department of Economics, Vienna University of Economics & B.A.)

Abstract

Over the past decades financial investment of non-financial businesses has been rising and accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. 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. 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. Extensive test of robustness are performed. For the first three countries evidence that confirms the negative effect of financialization on accumulation is found. A revised version of the paper is forthcoming in the Cambridge Journalof Economics. Please contact the author for the revised version.

Suggested Citation

  • Engelbert Stockhammer, 2000. "Financialization and the Slowdown of Accumulation," Working Papers geewp14, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    • Handle: RePEc:wiw:wiwgee:geewp14
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    File URL: http://www.wu-wien.ac.at/inst/vw1/gee/papers/gee!wp14.pdf
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    Keywords

    financialization; business investment; class analysis; theory of the firm;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • D2 - Microeconomics - - Production and Organizations
    • G2 - Financial Economics - - Financial Institutions and Services

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