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At the heart of the matter: household debt in contemporary banking and the international crisis

Author

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  • Paulo L. dos Santos

    (School of Oriental and African Studies (SOAS))

Abstract

This paper, drawing on Marxist political economy, conceptualizes the phenomenon of activities of banks as determinants of the current crisis. The main argument is the most significant aspect of recent changes in banking activities has been the turn towards individual wage income as a source of bank profits. This can be summarized in two ideas. 1) the conflict between households and financial firms that leads to an over-indebtedness of the former during a context of disadvantageous social relations for borrowers, and 2) the existence of theoretical reasons that argue that the economic recovery is difficult because the negative impact on the household consumption. Hence, it is argued that the recession will have an unprecedented length in the absence of a significant public intervention in the labour and financial markets.

Suggested Citation

  • Paulo L. dos Santos, 2009. "At the heart of the matter: household debt in contemporary banking and the international crisis," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 72(03), pages 54-79.
    • Handle: RePEc:ekz:ekonoz:2009307
    as

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    References listed on IDEAS

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    1. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    2. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    3. Makoto Itoh & Costas Lapavitsas, 1999. "Political Economy of Money and Finance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37578-9, December.
    4. Cynamon Barry Z. & Fazzari Steven M., 2008. "Household Debt in the Consumer Age: Source of Growth--Risk of Collapse," Capitalism and Society, De Gruyter, vol. 3(2), pages 1-32, October.
    5. Costas Lapavitsas & Paulo L. Dos Santos, 2008. "Globalization and Contemporary Banking: On the Impact of New Technology," Contributions to Political Economy, Cambridge Political Economy Society, vol. 27(1), pages 31-56.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Costas Lapavitsas & Ivan Mendieta-Muñoz, 2017. "Financialisation at a Watershed in the USA JEL Classification: B50, E10, E44, G20," Working Paper Series, Department of Economics, University of Utah 2017_10, University of Utah, Department of Economics.
    2. Elif Karacimen, 2016. "Consumer Credit as an Aspect of Everyday Life of Workers in Developing Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 48(2), pages 252-268, May.
    3. Szymborska, Hanna Karolina, 2019. "Wealth structures and income distribution of US households before and after the Great Recession," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 168-185.
    4. Isil Tellalbasi, 2014. "Financialization Of Household Sector In Turkey., 2000-2013," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(12), pages 1826-1839, December.

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    More about this item

    Keywords

    marxist analysis; profits of debt; household indebtedness;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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