Financialisation and Rising Shareholder Power in Kaleckian/Post-Kaleckian Models of Distribution and Growth

• Published in: Review of political economy Vol. 22; no. 2; pp. 205 - 233
• Main Authors: Hein, Eckhard, Van Treeck, Till
• Format: Journal Article
• Language: English
• Published: London Routledge 01-04-2010; Taylor and Francis Journals; Taylor & Francis Ltd
• Series: Review of Political Economy
• Subjects: Accumulation; Business economics; Economic models; Growth models; Growth theory; Identity; Investment; Ownership and control; Power; Production capacity; Profits; Stockholders; Studies; Wages
• ISSN: 0953-8259; 1465-3982
• DOI: 10.1080/09538251003665628

We establish the link between rising shareholder power on the firm level, increasing pressure on labour, and redistribution at the expense of wages, with the macroeconomic effects on capacity utilisation, profits and capital accumulation. Three channels of transmission of 'financialisation' and increasing shareholder power, the 'preference channel', the 'finance channel' and the 'distribution channel', are introduced into two different variants of the Kaleckian distribution and growth model, the Kaleckian model and the Post-Kaleckian model. Within these models, three potential regimes of accumulation are derived, the 'contractive' regime, the 'profits without investment' regime, and the 'finance-led growth' regime. Only the 'profits without investment' regime generates a strict micro-macro identity, whereas the other two regimes are characterised by fallacies of composition, a 'paradox of accumulation' in the 'finance-led growth' regime and a 'paradox of profits' in the 'contractive' regime.