“Getting out of the crisis: the role of Income Distribution” Symposium CEPN – Groupe AMPK “Post-Keynesian analyses and modeling” Saint-Denis, June 9th and 10st 2011
Growth and Income Distribution: How to Understand the Crisis and Really Get Out of It
(if possible)
Michel Husson (IRES) http://hussonet.free.fr
Neoliberal capitalism Three stylized facts 1. Fall in the wage share / increased rate of profit 2. Stagnation of the rate of accumulation 3. Increase in the share of dividends
Wage share in value added USA + EU + Japan, 1960-2008 74 73 72 71 70 69 68 67 66 65 64
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Average weighted by GDP Source: European Commission, Ameco Database
The profit rate in the United States and in Europe. 1950-2008 30 28 26
United States
24 22 20 18 16 14 12
Germany+France+United Kingdom
10
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
Average weighted by GDP. Sources: National accounts
2005
Profit and Investment USA + EU + Japan, 1960-2008
% of value added. Average weighted by GDP Source: European Commission, Ameco database
Net Dividends as % of the wage bill United States, France, United Kingdom, 1960-2008 13
30
12
28
11
26
10
24
9
22
8
20
7
18
6
16
5
14
4
12
3
France
United States
United Kingdom (right scale)
2
10 8
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Sources: Bureau of Economic Analysis, INSEE, United Kingdom Economic Accounts
Financialisation and Unemployment EU15 1965-2007 12
130
11
120
10
110
9
100
8
90
7
80
6
70
5
60
4
50
Unemployment rate
3
Rate of financialisation
2 1
1965
40 30 20
1970
1975
1980
1985
1990
1995
2000
Source: European Commission, Ameco database
Wages and private consumption United States 1960-2008
Source: Bureau of Economic Analysis
2005
Wages and private consumption European Union 1960-2008
Source: European Commission, Ameco database
Two “scissors” • Profit / Accumulation • Wage bill / Consumption
Two explanations (not contradictory) • Predatory finance • Mismatch between social demand and capitalist criteria
The Post-Keynesian Firm under Financialization (Stockhammer’s Case)
Thomas Dallery “Post-Keynesian Theories of the Firm under Financialization” Review of Radical Political Economics, Vol.41 n°4, 2009
A general scheme of analysis
Four major contradictions: towards a “chaotic regulation” Dilemma of distribution profitability vs employment
Dilemma of globalisation imbalances vs global growth
Budgetary dilemma
austerity vs social spending
European dilemma
everyone for themselves vs coordination
Growth, employment and unemployment EU15 2001-2015
Three questions
1. When incomes grows, who gains ? http://www.stateofworkingamerica.org/pages/interactive?/ Economic Policy Institute
Between 1987 and 2007 Average incomes in the U.S. grew by $15,104 The richest 10% got 84% of that growth The bottom 90% shared 16%
2. Does growth really create jobs ?
Productivity and growth - France 1950-2008
3. Is growth compatible with the goals for reducing CO2 emissions ?
Main ingredients for an alternative Priority to social needs
change in the income redistribution reduction of working time
Euroconvergence
unified taxation of capital European budget for harmonization European minimum wage
