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The Macroeconomics of Finance-Dominated Capitalism – and its Crisis

Eckhard Hein, The Institute for International Political Economy (IPE), Berlin School of Economics and Law, Germany
In this timely and thought-provoking book, Eckhard Hein illustrates that the Great Recession, which hit the world economy in 2008/09, is rooted in the contradictions of finance-dominated capitalism. The author provides an in-depth exploration of the macroeconomics of finance-dominated capitalism, its problems and its crisis, and presents economic policy lessons and alternatives.
Extent: 232 pp
Hardback Price: $120.00 Web: $108.00
Publication Date: 2012
ISBN: 978 1 78100 554 5
Availability: In Stock
Paperback Price: $44.00 Web: $35.20
Publication Date: 2013
ISBN: 978 1 78195 310 5
Availability: In Stock
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  • Economics and Finance
  • Financial Economics and Regulation
  • Post-Keynesian Economics
In this timely and thought-provoking book, Eckhard Hein illustrates that the Great Recession, which hit the world economy in 2008/09, is rooted in the contradictions of finance-dominated capitalism. The author provides an in-depth exploration of the macroeconomics of finance-dominated capitalism, its problems and its crisis, and presents economic policy lessons and alternatives. In particular, he shows that since the early 1980s, finance-dominated capitalism has affected long-run economic developments via three distinct channels:

• the re-distribution of income at the expense of low labour incomes,
• the dampening of investment in real capital stock,
• and an increasing potential for wealth-based and debt-financed consumption.

The author concludes that against the background of these basic macroeconomic tendencies, increasing instability potentials at the national economy levels and rising current account imbalances at both global and European levels have developed and have contributed to the severity of the Great Recession.

This systematic study of finance-dominated capitalism presented from a macroeconomic perspective will prove a thought-provoking read for academics, researchers, graduate students and economic policy consultants with an interest in macroeconomics, financial economics, economic policies, and distribution and growth.
‘The rise to dominance of finance in the past three decades has had many profound effects on economic performance. In this book Eckhard Hein provides us with detailed, well-grounded and highly insightful analyses of the macroeconomic impacts on investment, employment, global imbalances, income distribution and much more. This is “must read” for those wanting to comprehend the macroeconomics of the era of financialization, and for those seeking macro-economic policies to address the financial crisis and bring economic prosperity.’
– Malcolm Sawyer, University of Leeds, UK

‘Eckhard Hein examines the causes and consequences of financialisation. His book is economics as it should always be: it combines reflections, data gathering, empirical analysis, theoretical formalization, and policy recommendations. Hein goes beyond the exuberant behaviour of the banking industry to analyse the global financial crisis and the eurozone crisis, showing, through various variants of a Kaleckian growth model, the macroeconomic consequences of the rising dominance of finance over modern capitalism during the last three decades.’
– Marc Lavoie, University of Ottawa, Canada, and University of Paris 13, France
Contents: Preface 1. Introduction 2. Finance-dominated Capitalism and Re-distribution of Income 3. Finance-dominated Capitalism, Capital Accumulation and Macroeconomic Regimes 4. Finance-dominated Capitalism and Long-run Productivity Growth 5. Finance-dominated Capitalism, Consumption, Household Debt and Instability 6. Finance-dominated Capitalism, Global Imbalances and Crisis 7. Requirements for Income-led Recovery and a Global Keynesian New Deal 8. The European Financial and Economic Crisis: Alternative Solutions from a Post-Keynesian Perspective 9. Summary and Conclusions References Index