Financialization and Distribution from a Kaleckian Perspective: The United States, the United Kingdom, and Sweden Compared—Before and after the Crisis

In this article we analyze the effects of financialization on income distribution, before and after the Great Financial Crisis and the Great Recession, for the two liberal Anglo-Saxon economies, the United States and the United Kingdom, and for a typical Nordic welfare state economy, Sweden. We apply a Kaleckian perspective in which the focus will be on functional income distribution and thus on the relationship between financialization and the wage share or the gross profit share. According to this approach, financialization may affect aggregate wage or gross profit shares of the economy as a whole through three channels: first, the sectoral composition of the economy; second, the financial overhead costs and profit claims of the rentiers; and third, the bargaining power of workers and trade unions. We examine empirical indicators for each of these channels, both before and after the crisis. We find that the types of countries investigated here have shown broad similarities regarding redistribution before the crisis, however, with major differences in the underlying determinants. These differences have carried through to the period after the crisis and have led to different results regarding the development of distribution since then.