A view on capitalism from different angles
A view on the crisis from different angles
The focus on the flaws in the financial system may hide other causes of the crisis. The polarization in income distribution, in particular, tends to get glossed over as a potential cause of the crisis. Financial deregulation is only half of the story, the polarization of income distribution, thus the growth of inequality is another one; it is their interaction that provided the grounds for the crisis.
Engelbert Stockhammer’s paper at RMF tells us in a nutshell the following:
“Neoliberalism has led to a shift in power relations between capital and labour. As a consequence income distribution has shifted sharply in favour of capital. Economically this has a dampening effect on domestic demand (as demand is wage led in the world as whole) which provides the background in front of which the macroeconomic imbalances that erupted in the present crisis have to be understood.”