University of Bath PHD The impact of financialisation on income inequality in the context of neoliberalism. Country cases study: USA, South Korea, Argentina, Sweden Akizhanov, Kuat Award date: 2019 Awarding institution: University of Bath Link to publication Alternative formats If you require this document in an alternative format, please contact: [email protected] General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal ? Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 07. Oct. 2021 The impact of financialisation on income inequality in the context of neoliberalism. Country cases study: USA, South Korea, Argentina, Sweden Kuat Balkhashevich Akizhanov A thesis submitted for the degree of Doctor of Philosophy University of Bath Department of Social and Policy Sciences February 2019 Copyright notice Attention is drawn to the fact that copyright of this thesis/portfolio rests with the author and copyright of any previously published materials included may rest with third parties. A copy of this thesis/portfolio has been supplied on condition that anyone who consults it understands that they must not copy it or use material from it except as licenced, permitted by law or with the consent of the author or other copyright owners, as applicable. This thesis may be made available for consultation within the University Library and may be photocopied or lent to other libraries for the purposes of consultation with effect from……………….(date) Signed on behalf of the Faculty/School of................................... Contents List of figures .............................................................................................................. vi Acknowledgements .................................................................................................. viii Abstract ...................................................................................................................... ix Abbreviations ............................................................................................................. x Chapter 1. Introduction: rethinking income inequality in contemporary capitalism .................................................................................................................. 1 1.1. Defining the aim, research questions and the hypothesis ................................ 1 1.2. Contextualising the thesis: why income inequality? ......................................... 2 1.2.1. Some definitions ........................................................................................ 3 1.2.2. Patterns and views .................................................................................... 5 1.3. Why inequality matters ..................................................................................... 9 1.4. Measurement debates and the level of inequality .......................................... 12 1.5. Causes of inequality ....................................................................................... 16 1.6. Bringing income inequality studies back into political economy ..................... 21 1.7. An overview of the thesis ............................................................................... 28 Chapter 2. Neoliberal financialisation: a conceptual framework ....................... 29 2.1. Introduction .................................................................................................... 29 2.2. The political economy context: dimensions of neoliberalism .......................... 29 2.2.1. Neoliberalism as a “new old phase” of capitalism and transnational hegemonic “thought collective” .......................................................................... 29 2.2.2. The crisis of capital accumulation and the restoration of class power ..... 37 2.2.3. The emergence of the new global financial order .................................... 40 2.3. Neoliberal financialisation: the essence of finance capitalism ........................ 43 2.3.1. Historical and theoretical overview of finance capital ............................... 43 2.3.2. Financialisation as a neoliberal regime of income accumulation ............. 46 2.4. Establishing a knowledge gap in the financialisation and income inequality nexus – previous empirical studies ....................................................................... 54 2.5. Conclusion ..................................................................................................... 59 Chapter 3. Philosophical foundations of the methodological approach ........... 61 3.1. Introduction .................................................................................................... 61 3.2. Epistemological and ontological stances: the perception of reality and knowledge in critical realism ................................................................................. 62 3.3. Inadequacy of mainstream economics orthodoxy and its methods ................ 71 3.4. Conclusion ..................................................................................................... 80 ii Chapter 4. Methods and research design: building the analytical framework.. 82 4.1. Introduction .................................................................................................... 82 4.2. A pluralist framework: synthesising critical realist-oriented causal-processual explanations with heterodox traditions .................................................................. 83 4.2.1. Retroduction and analytical constructs of causal-processual explanations ........................................................................................................................... 83 4.2.2. Pluralism within heterodox approaches and the synergy effects ............. 87 4.3. Building explanatory causal-processual analytical constructs: neo- institutionalist, neo-Marxian, and post-Keynesian perspectives ............................ 92 4.3.1. Neo-institutionalist perspective ................................................................ 95 4.3.2. Neo-Marxian perspective ......................................................................... 97 4.3.3. Post-Keynesian perspective .................................................................... 99 4.4. Research design: qualitative method and case study approach .................. 103 4.5. Analytical framework: developing financialisation-induced income inequality theory .................................................................................................................. 104 4.6. Conclusion ................................................................................................... 107 Chapter 5. USA: the birth of the global neoliberal financialisation order ....... 108 5.1. Introduction .................................................................................................. 108 5.2. Neoliberal turn and income inequality in the USA: 1980-2010 ..................... 111 5.2.1. Ideas and institutions ............................................................................. 111 5.2.2. From ideas to policies ............................................................................ 114 5.2.3. The level of income inequality: 1980-2010............................................. 117 5.3. Analytical construct #1: the evolution of the US financial sector .................. 120 5.4. Analytical construct #2: dynamics in the financial sector profit rates and labour’s share of income ..................................................................................... 125 5.4.1. Increased financial profits ...................................................................... 125 5.4.2. Decreased labour income share ............................................................ 127 5.5. Analytical construct #3: rental income from financial assets and private debt ............................................................................................................................ 129 5.5.1. Rising rental income .............................................................................. 129 5.5.2. The level of household debt ................................................................... 130 5.6. Conclusion ................................................................................................... 133 Chapter 6. South Korea: transforming national model ..................................... 135 6.1. Introduction: domestic and global political economy context........................ 135 6.2. From developmentalism to neoliberalism and rising income inequality ........ 139 6.2.1. The first stage of the neoliberal turn: decline of profit and democratisation ......................................................................................................................... 139 iii 6.2.2. The global financial order: Wall Street-Federal Reserve-IMF