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The finance-dominated growth regime, distribution, and the present crisis

  • Engelbert Stockhammer


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

The paper discusses the interactions of changes in income distribution and the accumulation dynamics in the post-Fordist accumulation regime in OECD countries, which is characterized by deregulated financial markets. The neoliberal mode of regulation came with a decisive shift in power relations at the expense of labor, which is clearly reflected in the fall of wage shares across OECD economies. The notion of a “finance-dominated” accumulation regime is proposed to highlight that financial developments crucially shape the pattern and the pace of accumulation. Financial globalization has relaxed balance of payment constraints and thereby allowed the build up of big international imbalances. The combination of real wage moderation and financial liberalization has led to different strategies (or at least outcomes) in different countries. While some countries (like the USA) exhibit a credit-fuelled consumption-driven growth model that comes with large current account deficits, others (like Germany and Japan) show an export-driven growth model with modest consumption growth and large current account surpluses. Overall the finance-dominated accumulation regime is characterized by a mediocre growth performance and by a high degree of fragility.

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Paper provided by Vienna University of Economics and Business, Department of Economics in its series Department of Economics Working Papers with number wuwp127.

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Date of creation: Apr 2009
Date of revision:
Handle: RePEc:wiw:wiwwuw:wuwp127
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  1. Pascal Petit, 1999. "Structural Forms and Growth Regimes of the Post-Fordist Era," Review of Social Economy, Taylor & Francis Journals, vol. 57(2), pages 220-243.
  2. 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.
  3. Reinhart, Carmen & Reinhart, Vincent, 2008. "From Capital Flow Bonanza to Financial Crash," MPRA Paper 11866, University Library of Munich, Germany.
  4. Özlem Onaran & Engelbert Stockhammer & Lukas Grafl, 2009. "The finance-dominated growth regime, distribution, and aggregate demand in the US," Department of Economics Working Papers wuwp126, Vienna University of Economics and Business, Department of Economics.
  5. Claessens, Stijn & Kose, Ayhan & Terrones, Marco E, 2008. "What Happens During Recessions, Crunches and Busts?," CEPR Discussion Papers 7085, C.E.P.R. Discussion Papers.
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