The Political Economy of Financialisation in an Age of Growing Inequality
Abstract
This article proposes a re-interpretation of the political economy of financialisation in the OECD countries, which have experienced a continuous rise in income inequality. I show that changes in the income distribution may threaten the socio-political foundations of financialisation. First, whereas the continuous increase in income inequality maintain the alliance between financiers, managers and high-skilled workers intact to support the adoption of pro-minority shareholder, all the consecutive changes in financial and labour markets have produced increasing institutional incoherence and labour market dualisation, making the previous alliance more fragile. Second, despite stagnant incomes, middle-class and low-income households are in favour of higher financialisation because easy credit stimulates their consumption level. Encouraging credit supply contributes to the rise in household debt, thereby increasing workers’ vulnerability.