Inequality and financialisation - The case of the EU (original) (raw)

2014, Klassen/Sozialstruktur "Inequality and Financialisation: The Case of the EU" Study by Marica Frangakis

Inequality in the distribution of income and wealth feeds the process of financialisation and is fed by it. It is a two-way relationship, which has favoured the meteoric rise of the economic, social, and political power of finance in the past thirty years. This rise has been marked by financial crises of varying intensity in different localities. The financial crisis which erupted in late 2007, however, has been both deeper and more widespread across the developed financial systems of the world than in the past, aggravating the distributional inequalities that are inherent in the process of financialisation. In the EU, the era of financialisation is associated with the introduction of the Single Market in the mid- 1980s and of the single currency in the 1990s, as well as the pursuit of financial integration from the late 1990s onwards at the expense of financial stability and consumer protection. As in other parts of the advanced capitalist world, the 2007/2008 financial crisis was succeeded by an economic crisis in the EU as well. Five years later, it is still unfolding. Certain areas are converging towards low growth, while others are deep in recession. The distributional implications of these trends are especially important. In this paper, we discuss the connections between inequality and financialisation in the EU.