Concentration, Conflict and Growth: A Study of the US Economy Since 1950
This paper will try to analyze some stylized facts for the US economy since 1973 and contrast them with what has come to be popularly known as the golden age (1950-73). Along with an increase in the profit share as well as wealth concentration in post-1973 period, there has been a dramatic increase in the average consumption as a proportion of the GDP. Simultaneously, there has been financial deregulation resulting in an unprecedented level of freedom and advantage to the rentiers. All this was happening while the growth rate of the economy declined compared to the golden age period. We argue that there is a link between these seemingly disjoint processes viz. growth, concentration and financialization of capital, which could be studied in a Kaleckian-Keynesian framework. The processes of concentration and financialization have had two opposite effects, though not necessarily equal in their impact, on the economy; on the one hand, it gave a boost to consumption through the wealth effect and on the other it led to under-investment. We study both these processes theoretically by building a growth model where both these processes play key roles and then we attempt to substantiate our theoretical claims by statistical and econometric analysis.
Keywords: Concentration, Monopoly, Financialization, Growth, Inflation
Visiting Fulbright Fellow, Political Economy Research Institute (PERI), University of Massachusetts